Fannie Freddie Bailout | California Current

You go to start your car and then, nothing. Unbelievable, the battery just died. But no worries, you call for help and within the hour you’re back on the road.

But, there are a few caveats. Keep the engine running for at least 15 minutes to charge up the battery. And if it’s dead, don’t turn off the engine till you’re at the nearest store that carries a new car battery.

Well Fannie and Freddie just got bailed out and there’s a few warning signs we should definitely consider - caveats, if you will.

Mortgage rates on 30 year fixed loan dipped below 6% finally, but guidelines are still tight. And here in California, our “jumbo” loan amounts are going to shrink from $729,750 to $625,000 starting January 1^st 2009.

Keep It Running. Well, so far we’ve seen good news in dropping rates, but we better keep the engine running. If we want this market to pick up, we have to keep this momentum. Like a dead battery, if we shut it off too early we’ll be right back where we started.

This bailout has hit every news headlines and my one hope is that buyers are listening. California is amongst the top states in the nation to get hit hardest by the foreclosure wave and we simply have too many homes sitting in our inventory. Take a look at this top 10 list of riskiest mortgage markets and notice how we own 8 of the 10 spots. What we need are buyers, and hopefully the reassurance that comes with this bailout gives them that extra kick.

Are We Dealing With a Dead Battery?

If we are, no matter how much momentum we have - it just won’t be enough. In a way, this bailout was meant to be a preventive measure and not a cure. If there wasn’t a bailout, we would have had a whole new set of problems.

So what will it take then? Here are a few things the San Francisco Chronicle wants to see on top of this bailout: