Freddie, Fannie bailout could lower rates, but guess who pays?

Suburban real estate and mortgage professionals as well as economists had mixed reactions Monday to the federal government's announcement that it would bail out Freddie Mac, and Fannie Mae, two of the nation's largest mortgage firms.

While it could mean lower mortgage rates, ultimately, taxpayers would foot the bill.

Investors in the two companies saw share lose about 75 percent this year. As confidence plunged, so would have been Freddie and Fannie's ability to raise its own money to provide loans. If either of them had gone under, the ripple effect on the economy would have been disastrous, local financial experts said. Here's a sampling:

•"This is a positive for consumers. Considering Freddie Mac and Fannie Mae held 50 percent of the mortgages for the real estate market, they needed the bailout. Without their continued involvement, mortgage rates would have been pushed up. If they had failed, it could have been catastrophic."

- Patrick Callan, incoming president, Illinois Association of Realtors, Wheaton

•"It's too soon to have any dramatic effect on consumers, but that could change. If they take them (the two organizations) to the level for low and moderate income people, it will have a dramatic effect on the industry. There would be no financing available to those who are above moderate income. ... That would force those homebuyers to go to the banks and savings-and-loans and those banks may not have enough to keep this real estate marketing going."

- Marve Stockert, executive director, Illinois Association of Mortgage Professionals, Lombard

•"In the short term, it's very good for consumers. In the long it's very good for consumers and tax payers. In the medium term, it's scary because we're in unchartered territory. It is a necessary gyration to clear the mortgage market and return it to private control."

- Evan Geiselhart, owner of HomeTrust Mortgage Corp., Schaumburg

•"In my opinion it was a necessary takeover. When the Fed takes this type of action, I think they're doing it for the greater good, not just for one individual and also to prevent financial disaster. ... The consumer will foot a big portion of this bail out."

- David Klein, financial consultant-senior vice president, RBC Wealth Management, Vernon Hills

•"In a best-case scenario, over time, it would lead to lower mortgage rates. That's in a best case in a vacuum. First, the housing will need to plateau in valuation. It's not eminent. We have an imbalance in supply and demand. That won't change until the market reaches an equilibrium."

-Diana Joseph, managing partner, senior portfolio manger, Dearborn Partners

•"This will help the mortgage market to stabilize. It will, in time, ease lending standards at banks and then make it easier to get loans. The banks usually sell their mortgages to Fannie Mae. If not, they're would have a tendency to get our fewer loans or those with higher rates. But this bailout should help reduce rates and, in turn, help home sales and home prices to stabilize."

- Alexander Paris Sr., chief economist, Barrington Asset Management, Barrington Hills

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