From the Washington Post:

When Fannie Mae and Freddie Mac's stock prices plunged and rumors of their insolvency swirled, the presidential campaigns of Sens. John McCain and Barack Obama released terse statements about the mortgage giants, then went nearly silent.

Rick Davis, McCain's campaign manager, was president of the Homeownership Alliance, which advocates the expansion of homeownership through low-interest mortgages funded by Fannie and Freddie. Arthur B. Culvahouse Jr., who is heading McCain's vice presidential vetting panel, was a lobbyist for Fannie Mae. Mark Buse, a longtime McCain aide, lobbied for Freddie Mac before returning to McCain's Senate staff.

Alberto R. Cardenas, one of McCain's top fundraisers, has lobbied for Fannie Mae, as have former Montana governor Marc Racicot and tax-cut advocate Grover Norquist.

Maria Echaveste, a top Clinton White House official whose husband, Christopher Edley Jr., is a close Obama friend and adviser, has lobbied for Freddie Mac, and former commerce secretary William M. Daley, a top Obama backer, was an in-house lobbyist.

Jamie Gorelick, a deputy attorney general in the Clinton administration, was also vice chairman of Fannie Mae.

That payroll has cost Fannie and Freddie nearly $200 million in lobbying and campaign contributions over the past decade, according to lobbying reports and Federal Election Commission disclosures. Fannie Mae and Freddie Mac grew huge and powerful by buying up home mortgages and consolidating them into fixed return bonds and other financial instruments with the implicit backing of the Treasury. Douglas Elmendorf argued that federal loans will minimize the personal risks to Fannie and Freddie managers and shareholders, while leaving taxpayers with all the risk.

 

From Marketwatch:

"Hopefully it will stabilize investor confidence and enable the (loan) providers to play their role." says Allen Fishbein, director of housing for the Consumer Federation of America.

Fannie and Freddie don't make loans directly to consumers, but they play an important role in the housing market. They purchase mortgages from lenders, and also repackage those loans as securities that are sold to investors.

Jay Brinkman, vice president of research and economics for the Mortgage Bankers Association, says: "The good news is there is no change for consumers. If you have pretty good credit, you should have no problem getting a mortgage."

Mike Schenk, senior economist for the Credit Union National Association, says the Treasury plan "confirms that the government would step in and provide liquidity."

The Fannie Mae/Freddie Mac saga and seizure of IndyMac Bank by federal regulators on Friday may have an impact on consumer confidence, Schenk says. Recent headlines could scare potential buyers, especially first-time home buyers, from making purchases.

From Dale Mayer's The Home Mortgage Book:

* Renting allows you more geographic flexibility. A rental lease is shorter and more finite than a mortgage.
* When you rent, you usually don't have to worry about maintenance.
* You don't have to pay property taxes.
* You don't have to worry about property values.
* Average monthly rent is less than a mortgage payment.

Product Description
Finding and arranging the best mortgage for your dream home purchase can be a confusing and daunting experience. With so many mortgage offers to choose from, you will want to be sure that you are getting the best loan and rate for your particular circumstances. Buying a new home can be an ominous process, whether it is your first or your tenth. It is definitely not something that you do everyday, but finding that perfect mortgage loan at the best rate does not have to be a difficult task. The best defense against feeling overwhelmed is to become informed, and with the help of this new book the process will become easy. You will learn how to find the best opportunities, how to negotiate, how to get the type of mortgage loan you need; how to calculate how much you can afford, understand the true cost of a mortgage and your capacity to repay, how to pre-qualify, understand the lending process, and analyze various mortgage products. With this book, you will understand financing, budgets, needs and wants, credit reports, home-buying timeline, the process of building a house, manufactured homes, negotiating with lenders, using the Internet to get the best rates, credit reports, home-buying timeline, construction loans, manufactured homes, real estate and mortgage glossaries, setting values, home warranties, homeowners insurance, creative financing, buying with little or no money down, closing and settlement inspections, legal contracts, mortgage agreements. You will know what you can afford, which government agencies can help, considerations for veterans, calculating monthly payments, and escrow. This comprehensive resource contains a wealth of modern tips and strategies for financing and closing on your house. The author shows readers how to find out how much they re really worth, how to uncover unknown assets, and how to enhance credit ratings within six months. It provides information and suggestions on everything from no-down-payment mortgages to finding the right mortgage agent. Though you may be relatively cash-poor or have a less-than-perfect credit rating, now you can find the house you ve always wanted and acquire a favorable mortgage.

Charles Moyer writes on Amazon.com:

efore you start into the home buying process, buy this book. Right from the beginning Dale Mayer spells it out: "…purchase of your dream home can be a confusing and daunting experience." In an easy, explaining style Mayer leads you through the experience, leaving you informed and with eyes wide open.

Many books on such a complex and life altering event like home purchase, tend to either stray on overwrought details for particulars that are beneficial to only a few or deal in cliché or shallow descriptions and glossed over details that end up being no help at all. The Home Mortgage Book has balanced a readable and informational tone with an obvious knowledge and logical sequence that will help anyone, but particularly novices in the mortgage process.

Mayer has done his research and offers honest and valuable tips that will save the home owner money not only on their initial purchase, but in managing the financial responsibilities and challenges over the life of the mortgage. His suggestions around PMI insurance, refinance guidelines, and peculiarities between Reverse Mortgage, Second Mortgage and HELOC more than pay back the investment in this book.

More than just a mortgage book, there are tips and worksheets for financial analysis and a blunt discussion on wants versus needs in your home features and options selections. Additional sections on managing your credit, the case for renting and doing research and obtaining advice go a long way to avoiding "buyer's remorse" and leaving you secure and happy as a homeowner.

TERRENCE MCELHANEY WRITES:

Buying a house can be so exciting particularly for a first time home buyer. The idea of actually owning one's own piece of land is incredible. However the process and the complexities of mortgages can be a confusing headache at best. The Home Mortgage Book is a really good book for getting rid of some of that confusion.

This book breaks down the mortgage process step by step. Elements beyond just the mortgage payment like escrow and mortgage points are explained. The Mortgage Book doesn't just explain mortgages but explains the entire process of buying a house. The reader learns how what to look for when inspecting a house and how to determine what type of home is right for them.

When buying a house there are so many decisions to make. Several times throughout the Mortgage Book the author helps the reader make a decision by weighing the advantages and disadvantages of that choice. Should one buy a manufactured home or not? Should one use a bank or mortgage company? Should one get a fixed or adjustable loan? The reader isn't told what to do but just given more information in order to make an informed decision.

Even if one isn't buying a house right now, it's a good book. This is simply because everyone needs to at least know what the mortgage process is like. This is just good information that every adult should know. Also if a reader has less than perfect credit, tips are given on how to improve credit. So that when one is in the market to buy that first home he or she can be knowledgeable about what to expect.

Overall this is a great book for the first time home buyer. The language is simple and thorough explanations are given without bogging the reader down in too many unnecessary details. This book is a really good idea for someone in their twenties who may have just graduated college or newlyweds wanting to start a family. Even if you're not buying a house at the moment it's just good information to know.

FROM MIDWEST BOOK REVIEW: "Finding and understanding the best mortgage for a dream home can be a confusing experience; but with this book the process will be easy, making it a fine beginner's pick for public libraries and collections where introductory real estate investing is a hot topic. Modern strategies for financing and closing on a house tell how to uncover unknown assets, enhance credit ratings, understand lender requirements and timelines, and more. Other books of course give some of this information, but this title's expansive subjects and approaches make it a top recommendation."

JAMES CORNALL WRITES:

While this book is primarily about mortgages, it would be wise to point out that it, in fact, covers everything from the moment that someone decides that they're going to buy a house. And, as such, it's a great step-by-step guide to the entire process.
In fact, some of the introductory chapters, on considerations before taking the plunge are as valuable, if not more, than the more detailed banking and mortgage chapters.
The style of writing is very factual and clear, which makes it useful reading, but, at times, a little dull. However, it's good, relevant, information, and comprehensive, so it's only a minor irritant.
A better title - or sub-title - for the book might have been something along the lines of "So you want to buy a house? A step-by-step guide from decision making to mortgage." Actually, the book's title doesn't even come close to doing the book justice, it's a guide for every step of the home-buying process, and, as such, has to be regarded as a very useful - if not essential - book.
The information on every step of the process is top notch, and the tables and charts invaluable. This could easily be the homebuyers' Bible.
While not many institutions would necessarily want the customer to be totally informed about the entire process, it would be good if the first step in anyone buying a home would be the compulsory purchase of this book. It's that useful.
With the financial world and mortgages under scrutiny, it would be wonderful for all considering buying a home to save themselves a lot of potential problems - and a lot of money - by first investing in this book.

BOBBI WRITES:

Location, location, location - the three most important things when buying a home, right? Well after reading The Home Mortgage by Dale Mayer I learned that there are many factors that play an important role in your new home purchase, and location, is just one of them. This book provides information your banker and broker don't want you to know, but reading it will provide you with an insider's guide so you can make informed decisions and alleviate some of the anxiety that goes along with buying a house.

It goes through all of the stages including researching neighborhoods, hiring a home inspector, escrow, property taxes, and the purchase agreement; and helps the reader recognize that a realistic approach to what they can afford is best. This book even gives you the pros of renting versus buying, tips on how to improve your credit rating, and ways to reduce your debt. And if that weren't comprehensive enough, Dale Mayer even throws in a history lesson on mortgages.

The Home Mortgage is the book you'll want to keep with you when going through the entire home buying process; it includes invaluable resources like government web sites, on line calculators, worksheets, credit counseling services, and even a glossary to help with those confusing terms.

Gary Eldred writes in his new book:

The best source of financing for your home is the seller. If you can persuade the sellers to help wiht your financing, you can often get easier qualifying and lower costs.

In today's complex marketplace, sellers and buyers don't always see the opportunity. That's why innovative sales people need to bring owner-will-carry (OWC) into the mix of financing possibilities. You make sales happen when you know how to encourage sellers to offer the carrot of seller financing.

Seller-assisted financing offers easier qualifying, flexibility, lower closing costs, less paperwork, and quicker sales.

Here are ways you can get gouged on a mortgage:

* Garbage fees
* Bad faith estimates of closing costs
* Undisclosed prepayment penalties
* Misleading assumption clauses
* High cost, "no cost" loans
* Lowball rate quotes
* Oversized yield-spread premiums
* Flimsy rate locks
* Lowball/highball appraisals
* Deceptive advertising
* Conspiracy to commit fraud

From FinWeb.com:

Seller financing can be a very useful tool in bringing buyers and sellers together to close a deal. Not only used by the late-night info-commercial creating-wealth-with-no-money-down genre, seller financing is also a very viable mainstream option to help sell real estate.

As a second mortgage, seller financing has typically been used to bridge the dollar gap for a home buyer between the amount of the fist mortgage and the down payment that he or she has available. It has also been used as wraparound financing (new financing that wraps around existing financing). But seller financing can also be used in the first lien position.  Some of the major advantages include a substantial savings in closing costs for both buyer and seller. The parties can also negotiate the interest rate and the repayment schedule, as well as other conditions of the loan. The seller could also possibly negotiate a higher interest rate than could be received on other types of investments. A higher selling price could also be obtained as compensation for assisting the buyer with financing. The seller could screen the buyer for creditworthiness and the ability to pay, and could also require the buyer to purchase a PMI policy to protect the seller against default. The seller could also choose which security document (mortgage, deed of trust, land sales document, etc.) to best secure his or her interest until the loan is paid.

The buyer could make payments faithfully, but the seller might not make payments on any senior financing that may be in place, thus subjecting the property to foreclosure. The seller could also agree to a small down payment from the buyer to assist in the sale, only to have the buyer abandon the property because of the minimal investment that was at stake.

In short, a seller-financed sale can be good, as long as it is good for both parties. The concerns of buyer and seller must be addressed during negotiations.

 

Gary Eldred writes in his new book:

Borrowers with spotty credit err egregiously when they expect their large down payment to substitute for commitment and credit.

You will never persuade reputable lenders to loan you money if you point out how much money they will reap if they foreclose. Lenders don't want to foreclose.

A large down payment shows your commitment to a property.

Most credit repair firms can't fix your credit or boost your credit scores.

Anytime you fib, deceive, mislead, omit, overstate, or understate to obtain credit from a federal- or state-regulated financial institution, you commit criminal fraud.

Bogus credit counselors can scam you, too.

As sham credit repair firms finally begin to get the tar and feathers they deserve, many similar scam operations now do business as credit counselors, debt consolidators, and "get out of debt for dimes on the dollar" firms. Similar to their credit repair brethren, these firms typically over-promise, overcharge, and under-deliver.

Gerri Willis writes:

Complaints against credit repair companies have risen for three straight years, increasing more than 38% since 2004 according to the Better Business Bureau.

The Internet is another area ripe with credit repair scam artists.

In some cases, consumers pay these companies large fees up front - we're talking about more than $1500 in some cases. In return these companies promise to erase any blemishes on credit records, get new Social Security numbers for clients, or allow consumers to piggyback on someone else's credit record.

2: Know your rights

If you respond to a credit repair offer, by law you should be provided a copy of your consumer rights. This is a one-page document that tells you what your rights are if you dispute inaccurate information with credit repair companies.

You have the right to cancel a contract with any credit repair organization for any reason within three business days from the date the contract was signed, according to the Better Business Bureau.

3: Watch for Red Flags

Don't trust a credit repair company that advises you not to contact a credit bureau directly.

Before you do business with any credit repair company, check them out at the Better Business Bureau at www.welcome.bbb.org.

4: Get legitimate help

If you have a serious credit problem, check out the Consumer Credit Counseling Services.

 

From the FTC:

 

Credit Repair: Self Help May Be Best

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

• “Credit problems? No problem!”
• “We can erase your bad credit — 100% guaranteed.”
• “Create a new credit identity — legally.”
• “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
This brochure explains how you can improve your creditworthiness and gives legitimate resources for low or no-cost help.

The Scam

Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:

• companies that want you to pay for credit repair services before they provide any services.
• companies that do not tell you your legal rights and what you can do for yourself for free.
• companies that recommend that you not contact a credit reporting company directly.
• companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
• companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.

The Truth

No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

• You’re entitled to a free report if a company takes adverse action against you, like denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.
• Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months.
  The three companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report. To order, click on annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print the form from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. For more information, see Your Access to Free Credit Reports at ftc.gov/credit.
  Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.
• You can dispute mistakes or outdated items for free. Under the FCRA, both the consumer reporting company and the information provider (that is, the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting company and the information provider.

STEP ONE

Tell the consumer reporting company, in writing, what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the one on page 6. Send your letter by certified mail, “return receipt requested,” so you can document what the consumer reporting company received. Keep copies of your dispute letter and enclosures.

Consumer reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the consumer reporting company, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.

When the investigation is complete, the consumer reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reportincompany also must send you written notice that includes the name, address, and phone number of the information provider. If you request, the consumer reporting company must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the consumer reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

STEP TWO

Tell the creditor or other information provider, in writing, that you dispute an item. Be sure to include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider reports the item to a consumer reporting company, it must include a notice of your dispute. And if you are correct – that is, if the information is found to be inaccurate – the information provider may not report it again.

For more information, see How to Dispute Credit Report Errors at ftc.gov/credit.

Reporting Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal. A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

For more information, see Building a Better Credit Report at ftc.gov/credit.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before you sign anything. The law contains specific protections for you. For example, a credit repair company cannot:

• make false claims about their services
• charge you until they have completed the promised services
• perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees

Your contract must specify:

• the payment terms for services, including their total cost
• a detailed description of the services to be performed
• how long it will take to achieve the results
• any guarantees they offer
• the company’s name and business address

Have You Been Victimized?

Many states have laws regulating credit repair companies. State law enforcement officials may be helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair company, don’t be embarrassed to report it. While you may fear that contacting the government will only make your problems worse, remember that laws are in place to protect you. Contact your local consumer affairs office or your state Attorney General (AGs). Many AGs have toll-free consumer hotlines. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.

Need Help? Don’t Despair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Some may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
For more information, see Knee Deep in Debt and Fiscal Fitness: Choosing a Credit Counselor at ftc.gov/credit.

Do-It-Yourself Check-Up

Even if you don’t have a poor credit history, some financial advisors and consumer advocates suggest you review your credit report periodically

• because the information it contains affects whether you can get a loan or insurance — and how much you will have to pay for it.
• to make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
• to help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

Sample Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name

Enclosures: (List what you are enclosing)

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

From the nationalpost.com:

Fannie Mae and Freddie Macneed government assistance to continue operating. These are not just any old mortgage-broker or investment bank. Whether the gold bugs are right and financial markets continue to unravel, banks go under, consumers go into a coma and the economy slides into a vicious recession remains to be seen.

Policymakers have consistently underestimated the damage the U. S. housing downturn would do to the economy.

Mr. Bethune says at about US$11-trillion, U. S. mortgage debt makes up about 25% of the total debt in the economy. "It's not just about losses on mortgage-backed securities any more, it's about growing losses on a wide range of loan portfolios held by commercial banks, credit card loans, loans to commercial and industrial firms," he said. It was essential the U. S. government kept Fannie and Freddie, which buy up mortgages and securitize them, going. Besides, foreign central banks are relying heavily on the U. S. Treasury. They hold about US$950-billion of government agency debt, mostly Fannie and Freddie paper. The Treasury has agreed to increase the agencies' lines of credit, buy an equity stake in each if needed. 

From the WSJ:

Despite last week's protestations by Treasury Secretary Hank Paulson and Federal Reserve Chief Ben Bernanke, markets knew that Fannie Mae and Freddie Mac were not well capitalized.

Markets also anticipated the weekend bailout announcement by bidding down the share prices of the two mortgage giants, and also bidding up the prices of their debt (driving down their interest rates). Consider Freddie Mac, chartered by Congress in 1970. Its first stated purpose was "to provide stability" in the secondary mortgage market. Its second purpose (of four) was "to respond appropriately to the private capital market." That means no more government lifeline: no Treasury line of credit, no Fed line of credit.

There is no "market failure" in housing finance today, except the one created by government-backed institutions dominating housing finance. Home mortgages are plain vanilla financial instruments, perhaps partly due to Fannie and Freddie. As nearly every responsible commentator has observed, Fannie and Freddie urgently need more capital. Over the course of the 10-year period, Fannie and Freddie should systematically sell off their security portfolio and raise additional capital. No single institution, nor a duopoly, would play a crucial role in housing finance. Global financial markets provide liquidity, except when impeded by the effects of bad, government-directed policies. 

From the IHT:

WASHINGTON: The Bush administration hastily arranged the dramatic Sunday evening rescue of the giant mortgage-finance companies Fannie Mae and Freddie Mac after Wall Street executives and foreign central bankers told Washington that any further erosion of confidence could have a cascading effect around the world.

For decades, secretaries of the U.S. Treasury have insisted that the government did not stand behind the debt of Fannie and Freddie. The rescue package was cobbled together Saturday and Sunday during a series of frantic telephone calls and meetings involving senior officials at the Treasury and the Federal Reserve.

As he announced the plan, Paulson became the first Treasury secretary in more than a decade to use the steps of the imposing Treasury building as a backdrop. The plan Paulson announced calls on the U.S. Congress to give officials the power to inject billions of dollars into the beleaguered companies through investments and loans. By all accounts, Paulson was the engineer of the rescue package.

During a Saturday morning telephone conference call led by Paulson, and which included Bernanke and senior officials from the Securities and Exchange Commission and other agencies, Paulson suggested that a housing bill now moving through Congress could provide a legislative vehicle to get a rescue package adopted quickly, an official recalled.

During the hour-long call, Paulson discussed the idea of enlarging a credit line to the Treasury to which both companies have access. The Fannie and Freddie chief executives ultimately endorsed the plan after consulting with their directors.

Two hours after that meeting began, Paulson convened another conference call with the same officials who had been on the Saturday call.

Representative Barney Frank, Democrat of Massachusetts, the chairman of the Financial Services Committee, and a main author of the housing legislation, began working Monday to incorporate the Paulson plan into the bill.

 

From the AP:

The government is using our money again to haul private companies' hindquarters out of the fire — this time it's troubled mortgage giants Fannie Mae and Freddie Mac.

Those supporting the bailout of government-sponsored enterprises Fannie Mae and Freddie Mac point to what would happen if they collapsed, a scenario that has panicked investors in recent weeks.

As mortgage default rates have soared, these companies — like many financial institutions — have been plagued by massive losses. A failure of either company would also rattle global financial markets because their shares and debt are widely held by pension funds, mutual funds and most importantly, foreign governments.

Treasury Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies and buy some shares of the companies — if needed.

"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."

This government rescue plan also throws into question the legitimacy of the way these companies are structured as government-sponsored enterprises that are owned by public shareholders.

Currently, the companies have about $3.5 trillion in guaranteed mortgage-backed securities outstanding.

Mike Meyers writes:

Tim Bendel, president of the Minnesota Mortgage Association, noted that with Fannie or Freddie around, 6.25 percent is a common interest rate on a 30-year fixed mortgage. The federal government created the two publicly traded companies generations ago to buy outstanding mortgages from banks and other lenders.

Worries that investors would back away from repackaged home loans sold in the secondary market by Fannie Mae and Freddie Mac led to a crisis of confidence last week.

Fannie Mae stock closed at $9.73 a share Monday, down from a weekly high of $17.62. Every dollar Fannie Mae or Freddie Mac pays for a mortgage acquired from banks or other home lenders represents a dollar freed for a bank or other lender to use in a new mortgage. Bendel, the mortgage trade group president, views problems with home mortgage defaults and write-offs as part of a larger pattern of concern over consumer credit.

A federal bailout of Freddie Mac and Fannie Mae will buy time to calm financial markets that have grown wary of surprises, Bendel said.

 

Gary Eldred writes in his new book:

The interest rate you pay for your ARM includes the index rate plus the margin. The margin pays a lender's overhead, operating expenses, and profit, as well as the costs lenders suffer when borrowers default and lenders foreclose.

Often, ARMs include margins that range between 2.0 and 3.0%, although I have seen margins as low as 2.125% and as high as 6.0%.

If your credit score is above 720, you'll whiz through the loan underwriting process. You can choose from the lowest cost, lowest interest-rate loans. The lender may ask for few documents and verifications.

The more risk the lender sees, the more onerous the terms, fees, costs, and paperwork. For each $100,000 borrowed, higher-risk borrowers will likely pay $5,000 - $10,000 more per year and up to $6,000 in extra fees.

Your credit score will affect the size of your required down payment, qualifying ratios, type and cost of appraisal, mortgage insurance premiums, quantity and quality of verifications and documentation, interest rate, loan product, escrow requirements, origination fees and closing costs, and prepayment penalties.

Why would a lender shower hundreds of thousands of dollars on you?

Lenders think about these factors:

* Consistency: Fast track or flake?
* Character: Can the lender trust you?
* Capacity: Will your income cover the payments?
* Collateral: What loan-to-value ratio applies?
* Credit record: Have you managed your credit responsibly?
* Cash reserves: Can you handle financial setbacks?
* Compensating factors: What positives can you add?
* Compentency: Can you manage the property?