Government Control of the Housing Industry

I had an educational moment around borrowing to buy a home this week after inquiring about a V.A. loan. Here was the answer. A short sale (which we had July 2008) is treated the same as a foreclosure, therefore three years have to pass to qualify for any government backed loan. I asked the loan officer of U.S. bank what their bank policy is. He said they sell all of their home loans to Fannie Mae. I asked what Bank of America does and he said they sell their loans to Freddie Mac. I had to smile seeing a bigger picture of the widespread influence the government has over the housing market.

Fannie Mae wants another $15B of the emergency funds which is the 4th request this year for additional money. Both this company and Freddie Mac are insolvent and only held up by government intervention and ownership.

The $8k housing credit was extended to June 2010 and a new $6500 tax credit is now available to all who have owned and lived in their home for at least 5 years. I wonder if that means they have to sell their home to buy another, or just own a second home with this credit.

10.2% unemployment announced today, highest since 1982. In that year, I was working in the defense industry and the cold war was a major focus. I didn't experience any fallout from that recession.

I will continue following the housing situation closely since I see that as the realistic measurement that the recession is over.