Within the new stimulus package is an attempt to raise the limit on loans Fannie and Freddie can buy. Good idea? No way! Fortunately, with all the massive fraud going on around the country during the speculative run up, a significant portion of the toxic waste was held by lenders like New Century and over a hundred other lenders that went bust. The losers there were the shareholders of those public companies.
What happens when FNM and FRE take on this toxic waste and a new round of unchecked fraud and massive speculation begins? This time the bag holders will be the taxpayers of the United States! You might want to save your $600 check so you can send it back when the bill comes due for the bankruptcy of FNM and FRE.
One important provision temporarily raises the dollar limit on mortgages that can be bought or guaranteed by government-sponsored mortgage giants Fannie Mae and Freddie Mac. The current limit of $417,000 would rise above $600,000 and perhaps as high as $730,000 in the most expensive areas, congressional leaders said.