Regulators and competitors in the Nevada mortgage
market are beginning to take away Fannie Mae and Freddie Mac’s
roles as the biggest sources of money for Nevadans buying
homes. The two companies, which are federally sponsored, are beginning
to lose their forty percent control over all housing loans after many
accounting mistakes led to a call for increased regulation from the
Bush administration.
The companies are down from a record seventy percent of mortgage bond
sales in 2003, to thirty-eight percent of mortgage bond sales this year.
As the first real estate slump since the 1990’s causes mortgage
lending to contract by nineteen percent this year, it's unlikely Fannie
Mae and Freddie Mac will resume a role where they dominate the whole
mortgage marketplace.
Nevada homebuyers
increasingly prefer adjustable rate mortgage loans to the fixed rate
debt loans Fannie Mae and Freddie Mac typically buy. Twenty-five percent
of this year's Nevada mortgage loans will most likely be ARM’s.
ARM’s took off in Nevada because homebuyers wanted lower interest
rates and more flexibility after Nevada
housing prices rose fifty-seven percent in the past five years.
Fannie Mae and Freddie Mac, bogged down by three years of well publicized
federal investigations, failed to adapt to these lower rates.
ARM’s grew to thirty percent of new Nevada home mortgage
loans last year from seventeen percent in the previous year. More
than eighty percent of the home mortgage loans backing the bonds sold
by Fannie Mae and Freddie Mac have fixed interest rates.