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Without Fannie, Freddie, wither 30 year fixed rate mortgage

Fannie and Freddie also make ownership more affordable by allowing borrowers to repay loans with fixed-interest rates over an unusually long period. A person who borrows $100,000 at 6 percent interest will pay $600 each month for 30 years, compared to $716 each month for 20 years.

The 30-year loan first became broadly available by an act of Congress in 1954 and, from then until now, the vast majority of such loans have been issued only with government support. Most investors are simply not willing to make such a long-term bet. They prefer loans with adjustable rates.

Alex J. Pollock, a former chief executive of the Federal Home Loan Bank of Chicago, said such loans would remain available in the absence of a federal guarantee, but they might be harder to find. And lenders might demand a larger down payment. Or a better credit score.

Without Loan Giants, 30-Year Mortgage May Fade Away
Published: March 3, 2011
If Fannie Mae and Freddie Mac shut down, interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than customers in the suburbs.


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