You've probably heard that Fannie Mae and Freddie Mac were taken over or "bailed out" by the Federal Government over the weekend. The announcement came as the government felt that both of these institutions were potentially unable to meet their obligations. These agencies must pay off maturing Bonds every month, and they do so by selling new Bonds. But during the last twelve months, investor appetite to purchase new mortgage-backed security Bonds has deteriorated. As such, it has become more difficult for Fannie and Freddie to replenish capital to fund more loans. If both Fannie and Freddie became insolvent, the housing market as well as the mortgage market would come under further pressure.

With the Treasury stepping in to provide a "backstop" for the mortgage giants, investors now have confidence to purchase Mortgage Bonds. And the greater interest has helped to stabilize the mortgage bond markets and lower interest rates.

We were already starting to see tightening of housing inventory and there are a lot of buyers out there who have been sitting on the fence just waiting for someone to tell them we have hit bottom.  If people wait until the hoards of buyers who are sitting on the fence decide that it is time to get back in the market, then they will be competing with them, their choices of homes will go down and most likely they will pay more.

 If you know of anyone who has been thinking about buying tell them that now is the time to do it.  Because of the bail out noted above, interest rates have dropped this week to below 6% and you still have a lot of motivated sellers out there who will give you a good price.

 In addition, if your friends are first time homebuyers, please forward them a copy of the new $7,500 tax credit this in now available to them. This is a credit so it is taken directly off of the taxes owed.  In fact, if the taxes owed are less than $7,500 then the US Treasury will cut a check for the difference.  The credit does have to be paid back over the next 15 years, but it is a substantial amount of money that could make the difference between first time home buyers buying a home or not.  If you know of any first time homebuyers that have already bought since April 9^th of this year, this credit can help them as well so please let them know.  This credit will be available until July 1^st of 2009 and was part of the recent housing bill that was passed into law.

 Have your friends call me so we can discuss what this news means to them and how they can benefit.