Talk about a stimulus package! This one doesn’t need to wait for Congress or a new President. If the financial officials in charge carry through, it will inject $800 billion dollars into the economy in an attempt to jumpstart lending by the nation's banks for mortgages and consumer debt. The National Association of Realtors® trumpeted the news as great “for home buyers, home sellers and the U.S. economy” The Federal Reserve announced that it will purchase housing-related debts of Fannie Mae, Freddie Mac, and Ginnie Mae for up to $500 billion, thus freeing up mortgage money for new loans. Lawrence Yun, NAR chief economist, said this level of investment should be aggressive enough to bring interest rates down in a meaningful manner. “As we've seen in past recessions,” he said, “home sales rise when mortgage interest rates fall.” Yun said that given the present state of the mortgage market, interest rates on 30-year fixed-rate mortgages are too high. “If Fed action brings down mortgage interest rates by even 1 percentage point, it would increase homes sales by 500,000 units. That should help to draw inventory down and stabilize prices.” Yun and other economists agree that a healthy housing market is key to returning the general economy to good health. At the same time, the Treasury Department will focus $300 billion appropriated by Congress on other kinds of loans -- car loans, credit cards, for example. "The financial markets are not working as we'd like them to work ... and this is an effort to address that situation," said Treasury Secretary Henry Paulson, as quoted on MarketWatch.com. By shifting responsibility for mortgage loan liquidity to the Federal Reserve, the Treasury has more money from the Congressional bailout funding to focus on the general credit markets, which, according to Paulson, have essentially “ground to a halt.” Treasury plans to have its program done by February. The Fed can probably act more quickly on the mortgage assets. (Remember when Everett Dirksen said, "A billion here, a billion there. Pretty soon, you're talking real money?" -- I've got his picture here just so I can use the quotation. Otherwise, the former Senator from Illinois has nothing to do with this news.) To buy a Flagstaff home, contact Team Heitland at RE/MAX Peak Properties: 928-714-0001! | 
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