On the Market for Jan. 11

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On the Market

Tom Ross' On the Market column appears Sundays in the Real Estate section of the Steamboat Pilot & Today. Contact him at 871-4205 or e-mail tross@SteamboatToday.com.

Lock those mortgage rates in, if you can

Mortgage rates fell again this week, but local mortgage lenders report consumers will find that rates are volatile.

Kathryn Pedersen, vice president/mortgage officer with Yampa Valley Bank, said she recently was able to lock in a very favorable rate for a customer, but the rate was only available for two hours. It helped that the borrower had a credit score greater than 750 and a loan-to-value ratio of less than 60 percent.

The Associated Press reported Thursday that rates on 30-year mortgages fell to the lowest point in almost three decades.

Average rates on 30-year-fixed mortgages dropped to 5.01 percent. It was the 10th straight weekly drop, down nearly 1.5 percentage points since October. For a borrower taking out a $200,000 loan, the 1.5-point drop translates into a savings of more than $184 in monthly payments, the AP reported.

Paulson questions Fannie, Freddie

Even as local mortgage lenders were struggling this week with the way mortgage backers Fannie Mae and Freddie Mac are tightening down on loans for resort condominiums, outgoing Treasury Secretary Hank Paulson was raising questions about the future of the two lending giants.

Because they were chartered by Congress, Fannie and Freddie have been termed Government Sponsored Entities. However, they were taken over by the Feds last year and placed in conservatorship. That turn of events came about after the real estate crisis pushed the two publicly traded mortgage giants to the brink of collapse.

Now, Paulson says, it's time to chart a new course for Fannie and Freddie.

The Associated Press reported this week that under Paulson's plan, Congress would replace Fannie and Freddie with one or two private sector entities that would purchase and securitize mortgages with a credit guarantee backed by the federal government. The new companies would be privately owned but governed by a rate-setting commission that would establish a targeted rate of return, Paulson suggested.

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