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80% of Fannie and Freddie now owned by US taxpayers

By Brian Anderson
Published: Thursday, July 15th, 2010

15US taxpayers better demand for approval of their home loan applications. After all, both the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association are 80% owned by the taxpayers now. Yet, because they are government-owned loaning institutions, the stricter guideline in securing a home loans are generally gone. And though this might sound like a good thing for the people who do not have that good a credit score, it creates a threat to the financial security of the country and the rest of the world.

More and more people are being approved of their home loan applications. This means that Fannie Mae and Freddie Mac are loaning more from the government line of credit in order to buy the houses. And when these homeowners become delinquent payers, they are in the danger of having their houses foreclosed. While this is the ultimate end of their dreams of becoming homeowners, it is just as hard for the government to foreclose houses because they are also at the losing end of the transaction. Fannie and Freddie are required to shoulder payments for the foreclosure of the house which includes attorney’s fees, renovation, advertising for the foreclosed house, and looking for other occupants or buyers of the house, and so on.

Unbeknownst to many people, the tragic economic recession last year was brought about the same problem with the delinquent home loan grantees. The debt that was incurred last year for the  unpaid home loans are being carried on to the $145B that must be paid in the next few years through government bailout.

For now, the government is looking at possible ways to control the damage done to the house loan industry. The amount is predicted to go up as years pass by and the inflation rates goes up constantly. This then makes it even harder for the government if it will deal with the bailout in a later time. The estimate is that the 145B will have to be settled at 1 trillion US Dollars in the next few years. This is the price to pay to save a nation from undergoing the same tragic economic turmoil that was experienced a year ago. At least, after the delinquent loans are all paid, the next agenda will be shifted to the creation of jobs in order to have a sustainable working force who can pay for their own mortgages in the future.

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