Missourians might be asking themselves, how the potential federal regulation of mortgage companies Fannie Mae and Freddie Mac affect them.
It’s pretty straight forward, you go to the bank for a mortgage, then the bank sells your mortgage to a company like Fannie and Freddie. They then divide it up and sell pieces of that mortgage investors. Those pieces are packaged together in a pool with thousands of other mortgage pieces. That’s where University of Missouri personal finance planning chair, Rob Weagley, said risk comes into play.
"Missourians are no different than anybody else," he said. "We always want as much as we can for as little as we can put into it and we never want to lose, well you can’t have both of those."
When homeowners don’t pay the mortgage and housing prices fall, the pools become less valuable, the banks don’t have money to lend, investors lose and the purchasing power of the dollar declines. That’s something the government wants to prevent from getting worse.
"I think we’re gonna see some further oversight, if you will, of the mortgage finance industry," Weagley said.
He also said that oversight is needed to keep sanity in the market place because world markets depend on the U. S. economy.