We’re all a twitter over here in the San Francisco real estate world due to the ongoing credit mess.

Last weekend, the government (finally?) stepped in and took over Fannie Mae and Freddie Mac. As there are hundreds of articles, blogs, and opinion columns on this and sure to be more, I want to share some information that I feel well-described what the bailout means to you, me and other folks interested in local SF real estate.

How does this affect you if you are a San Francisco first time buyer? What about if you are already a homeowner who is looking to refinance or move up to a bigger or nicer home?

Here’s what one of our local mortgage experts has to say about the situation and how it’ll affect us, at least in the short term. No one knows the long-term effects. Not yet.

Based on what’s happening, what would I recommend? If you’re on the fence about buying, stop worrying about timing the market and get yourself a good value on a home, loft, condo or TIC and take advantage of the interest rate drop!

If you’re a homeowner, call your lender to see if refinancing makes sense for you. Just make sure you call someone trust-worthy so you know the information and advice is accurate and in your best interest. It won’t make sense for all of you to refi…so be careful.

If you don’t have a lender, call C.J. or ask me for more referrals. As my livelihood depends on working with solid San Francisco mortgage brokers, I certainly can recommend some great ones.

Here’s what local mortgage broker, CJ Kerls of Guarantee Mortgage has to say on the PROS & CONS of the government bailout…*

“On Sunday morning the US government took over the ailing mortgage giants Fannie and Freddie.  Below are what I believe to be the Pros and Cons to this historic event.



  1. Interest rates immediately took a positive outlook to the news.  The benefit to consumers is clear.   Cheaper money makes homes more affordable and refinancing into a 30 year fixed a better option for those who qualify.  Rates are down to 5.625% – 6.0% depending on points or no points for a 30 year fixed!
  2. The move will strengthen the US housing market.
  3. Line of Credit – the two firms will have an unspecified line of credit… essentially, they’ll be able to operate without the looming threat of running out of money and collapsing! In an effort to provide even more liquidly for the credit strained market, the fed will be purchasing mortgage-backed securities issued from the two firms later this month.



  1. This won’t make it any easier for a borrower who can’t qualify for a loan now.
  2. We could see guidelines get a little tougher… especially regarding limited documentation and low down payment loans.
  3. If you owned common stock of either of the two firms… you just lost big.
  4. No silver bullet – the credit crisis isn’t over because of the move.

Sincerely, CJ Kerls: Managing Partner, Guarantee Mortgage Corporation, 415.586.6003, cj (at) kerls.com “


Who are these characters Freddie Mac and Fannie Mae? According to Wikipedia, that all-knowing source…

The Federal Home Loan Mortgage Corporation (FHLMC) (NYSE: FRE), commonly known as Freddie Mac, is a privately-owned and run government sponsored enterprise (GSE) of the United States federal government. It is a stockholder-owned corporation, authorized to make loans and loan guarantees.

The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market increases the supply of money available for mortgages lending and increases the money available for new home purchases. The name “Freddie Mac” is a creative acronym of the company’s full name that has been adopted officially for ease of identification (see “GSEs” below for other examples). More HERE.

The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a publicly owned government sponsored enterprise (GSE) of the United States currently run by the Federal Housing Finance Agency (FHFA). It is a stockholder-owned corporation authorized to make loans and loan guarantees.

The name “Fannie Mae” is a creative pronunciation of the company’s acronym, FNMA, that has been adopted officially for ease of identification. It is more than an informal nickname; FNMA now refers to itself by this name. The acronym “Fannie Mae” is a borrowing from the well-known candy company, Fannie May Confections but with the spelling altered from “May” to “Mae,” so as not to confound the two, in writing. More HERE.


* Have more information you’d like to share on how the current economic news affects us here in the crazy world of San Francisco real estate? Let us know. We do not easily promote other businesses but if you have good ideas and a good track record, we want to share your insights with our readers. The idea is to educate, inform and help our clients and readers. So, with that in mind, send over whatcha got! 🙂


Bookmark (0)