The government takeover of Freddie Mac and Fannie Mae should have positive short term benefits for the real estate market nationally and here in the Sacramento area.  It clearly had a positive impact on Wall Street and opens the door for a longer term restructuring of these two mortgage giants who own or guarantee about $6 trillion in home loans.

The National Association of Realtors® said the takeover will bring much needed stability and continued liquidity to the nation’s mortgage market.  "This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy," NAR President Richard F. Gaylord in an NAR press release.

The two companies have been placed in a government conservatorship by the Treasury Department and new leaders have replaced the two prior managers.  According to the plan the government is taking up to an 80 percent ownership share and will review progress on a quarterly basis with the short term objective being to help stabilize the housing market by requiring both companies to increase their mortgage funding over the next 18 months.

With the government now backing Freddie and Fannie mortgage obligations there should be downward pressure on rates which could drive a positive cycle of investment as investors return to the market.  The result could be increased sales and a move towards greater price stabilization.  For the Sacramento area this could be a very positive development.

Long term the restructuring of these two mortgage giants is critical and it will, hopefully, allow the major players in the industry to come together and build a consensus for working in the future.