Jul 14, 2008 7:27 pm US/Eastern
Feds Try To Deal With Mortgage Mess
MIAMI (CBS4) ―
For your money, the stock market is struggling to find its footing after the barrage of developments in the mortgage industry.
With the lynchpins of the housing market in danger of catastrophic losses, the government stepped in with a rescue plan.
The massive aid package is designed to head off a potential meltdown.
"Fannie Mae and Freddie Mac play a central role in our finance system. Their support for the housing market is particularly important as we work through the current correction," said Treasury Secretary Henry Paulson.
On Monday, the stock market rang up triple digit gains in the first minutes of trading but investors are skittish.
The crisis in the mortgage industry is so extreme, the government sprang into action on Sunday to reassure the country that Fannie Mae and Freddie Mac are safe.
Under new rules proposed on Sunday, the 2 companies which are publicly owned but government sponsored, could borrow money from the Federal Reserve at a cheaper rate and get more credit from the Treasury Department.
So what does this latest news mean for you and your family?
"People should be constantly checking their bills and cutting back their expenses, checking their credit cards. They need to get some professional help figuring out what to do right now. If people don't take action right now, they'll be hurting themselves for years to come," said Howard Dvorkin of Consolidated Credit Counseling Service.
The two mortgage giants handle nearly half of all outstanding mortgages. They buy the loans from other banks, then repackage the mortgages and sell them to investors. If they go down, so does the housing market.
It's what brought the Dow below 11-thousand in the last trading session for the first time in about two years.
The mortgage giants have lost 11-billion dollars in nine months and the Treasury wants to extend its line of credit to Freddie and Fannie to make sure they have an emergency cushion.
Monday night starting at 5:00 p.m. the Neighbors 4 Neighbors 4 Your Money Phone Bank will be filled with local financial experts who will be available to answer all your calls on credit counseling.
The phone bank is open from 5:00 – 6:30 p.m. and all you have to do is call (305) 597-4444.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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