start to stimulate the housing market

The federal government's recent bailout of mortgage companies Fannie Mae and Freddie Mac will give a boost to the region's home-buying market, area real experts said.

"I think it'll bring more people into the market," said Russell Pruner, president of the Greenwich Association of Realtors. "If we don't have people looking, then we don't have people buying."

The Treasury Department, Federal Reserve and Federal Housing Finance Agency took control of both companies last Sunday after they amassed $14 billion in debt and put themselves on the brink of failure.

The federal government acted on Congress' authorization in July to give each company as much as $100 billion and start buying mortgage-backed securities from them.

Fannie Mae and Freddie Mac took on mortgages from borrowers who could not pay them back because they had overextended themselves with subprime mortgages at very low interest rates.

Both lending institutions, which were founded by the federal government, are similar in organization and purpose - to lend money so that more citizens can realize the American dream of homeownership.

Fannie Mae, which came from the acronym FNMA for Federal National Mortgage Association, was created in 1938 under President Franklin D. Roosevelt to make sure funds were available for homeownership during the Great Depression.

Freddie Mac was set up in 1970 so that Fannie Mae, which had become a publicly traded company two years earlier, would not have a monopoly on government-backed mortgages.

Ken president of the Connecticut Association of Realtors, said home buyers signed those mortgages with the expectation that they would have better-paying jobs in the near future and the housing market would continue to soar. But many home buyers' incomes did not go up as the housing market went down and their interest rates increased, he said.

"These home buyers never thought about when those rates began to adjust," DelVecchio said.

Realizing that the failure of Fannie Mae and Freddie Mac, which account for 40 percent of U.S. mortgages, would jeopardize the national and global economies, the federal government came to the rescue.

"I wouldn't say it's positive, but it certainly is necessary," said Mark, an economics professor at Fairfield University. "The mortgage industry won't do better unless Fannie Mae and Freddie Mac are rescued."

The federal bailout, which recently has caused mortgage rates to go down, will help more home buyers get mortgages, and lenders won't be offering unaffordable subprime mortgages, LeClair said.

"That's a good thing," he said.

Edward, a fellow economics professor at Fairfield University, said taxpayers are bearing the brunt of the crisis while facing a national deficit of about $500 billion.

"Where's this money going to come from?" he said.

Stuart Svirsky, president of Westport-based Mid-Fairfield Board of Realtors, said the bailout will help the area's real estate market by "loosening up" money for buyers.

"It's been holding its own. I certainly think this is going to have a good impact," he said, adding that the market has not been doing badly.

The bailout should help the home construction business by giving people confidence to get mortgages for new homes, said Joanne, editor of the Guilford-based magazine Connecticut Builder.

"It'll be very good for construction because the biggest issue for builders is getting people to sell their first homes so their buying new homes," she said. "Buyers have a sense of security and ease now that the government has taken hold of the situation."

The buyout most likely will increase business by bringing more buyers into a relatively slow market, said Michae, owner of New Canaan-based construction company Gulick Associates LLC.

"I don't think it's a cure-all, but it's a step in the right direction," he said.

Jeff, owner of Construction Concepts Corp. in Stamford, said the bailout will help his renovation business because of its psychological effect.

"When the market's down, people decide they're not going to do renovations," he said.

Gov. M. Jodi Rell was scheduled to meet last week with state agencies to come up with spending cuts to avoid a major state deficit. It could reach $145 million by June 30 if no cuts are made, Rell said.

Don, chairman of Rell's economic advisory panel, said the state's economy is "growing inch by inch as opposed to yard by yard," and has gained about 5,600 jobs in the past year, despite falling house values and increasing costs for food, energy and other needs.

DelVecchio said it was unfortunate that Fannie Mae and Freddie Mac had to be saved by the government, but he thinks it will bode well for home buyers, the market and the economy.

"I do think as we're starting to see how this is steadying the market, the feeling is that this is not a bad thing," he said, adding that mortgage rates have dropped to about 5 percent or 6 percent. "That may start to stimulate the housing market again, and then the economy may fill in from there."