A financial advisor in north-central Iowa says perspective is key to understanding this week’s federal government bailout of mortgage giants Fannie Mae and Freddie Mac. Jim Tausz of the Bradford Financial Center in Clarion, says you first have to consider that 96% of the mortgages in the U.S. are being paid in full, on time. That leaves just 4% that aren’t making payments.
"Of the four percent, two-percent of those are late, and what I mean by being late is they’re 30, 60 or 90 days late. They haven’t made their payments like they had planned on making. The other 2% are in default and that’s where you’re hearing of foreclosures." Tausz says while there has been a significant increase in the number of bankruptcies and foreclosures, the industry as a whole is healthy and not in danger of collapse, as some panicked folks may be thinking.
He says: "When you consider that 96% of all the loans out there are being paid and are paid on time, and another two-percent are delinquent but they’re not bad delinquent, they’re only maybe 30 or 60 days delinquent, that is not that bad of a situation." Tausz said the government takeover of Fannie Mae and Freddie Mac is a good thing as they play an important role in the nation’s housing industry.
He compares them to the hub of a wheel and without the hub, you can’t use the wheel. Tausz says: "We’ve got five-trillion dollars in Fannie Mae and Freddie Mac and that’s a huge amount of the mortgages, substantially, like 50% of the mortages are with this two companies." He says the move will help with the buying and selling of real estate, keeping America’s financial institutions sound and strengthening the global economy.