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There are major rumblings for the nation's economy with mortgage giants Freddie Mac and Fannie Mae in crisis. Wall Street and Washington grappled with how to support those two troubled pillars of the economy.
Utahns, too, are watching closely, especially regarding the housing market. When you throw in record-high gas prices with that, there's plenty of anxiety out there.
It's an economic double whammy: a new record today for oil prices, and stocks for Freddie Mac and Fannie Mae plummeted amid fears the housing giants could go under. The mortgage mammoths' hold or guarantee half of the almost $10 trillion of debt in the United States.
"You can't let Freddie Mac and Fannie Mae go down. They've got to remain solvent even if the government has to help them. It would be just a huge shock to the home building industry and real estate," said James Wood, economist with the University of Utah.
Wells Fargo Bank economist Kelly Matthews said, "This is a big deal because the secondary mortgage market is really important."
In Utah, the situation is bound to slow an already sluggish housing market. Consumers can expect borrowing to become more difficult.
"What it could do is make getting a mortgage more difficult. It could tighten credit. It's already tight now, and it could further tighten it," Wood said.
Still, experts say there's no reason for existing homeowners to panic. "If the worst, worst, worst situation were to happen, nothing will happen to your mortgage," Matthews said.
If the financial health of the two mortgage giants continues to deteriorate, experts say the government may have little choice but to take them over or bail them out, or a combination of both.
E-mail: jdaley@ksl.com
