positive impact on the local real estate market

The federal government's takeover of Freddie Mac and Fannie Mae could have a positive impact on the local real estate market, according to local real estate specialists.

"For us, it has a short term benefit in the real estate market," said Mike Chesser, attorney and board certified real estate specialist.

One benefit from the takeover will be seen through lower interest rates for mortgages, according to James Baker, executive vice-president of Baker and Lindsay Inc., a mortgage banking company.

"Most likely, local rates will get better. We've already seen a reduction of rates by one-half to three-quarters of a percent," said Baker. "We've never seen a drop that rapid."

The low interest rates could bring more buyers back and help some people refinance their way out of trouble, according to Peter Pike, in-house-counsel for McNeese Title LLC.

"Money is still there," said Pike. "But it's not going to make credit easier for anybody."

According to Chesser, the current credit crisis was caused by the failure to monitor and enforce regulations that were previously enforced, while low interest rates and easy access to credit allowed people to borrow more than they could afford.

"If we straighten out their mismanagement then it will be a positive outcome," said Chesser. "Both corporations were out of control."

Proper management of the companies should restore investor confidence to the real estate market, bringing buyers back and increasing demand, according to Baker.

"Relaxed lending standards encouraged loan officers to do marginally ethical or even unethical business practices," Baker said. Some of these practices included making "liar loans," which were based on stated income, not verifiable income.

The alternative to the takeover would have been a bleak picture, according to Pike.

"If they went out of business, mortgage costs would've went through the roof," said Pike. "We would basically go back to the 1960's with home lending."

The collapse of the companies would have eliminated all stability in the market, according to Pike.

"Had they collapsed it would've devastated the entire real estate market across the country," he said.

However, the takeover does not guarantee a positive outcome for the real estate industry, according to Chesser.

"If the government mismanages them as badly as private industry, then it won't get any better," he said.