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The Fed’s policy statement could aid in halting the foreclosure process for some. Freddie Mac hopes the report can lower interest rates and increase rate of loan payoffs. The market has shown a general stagnation over the past several days due to self induced trading paralysis ahead of the Federal Reserve’s policy statement. The Fed policy report aimed to detail plans to purchase Treasury bonds and many worried about the overall scope and sequence of the plan. The current Fed verdict is in and the policy report revealed that the Federal Reserve will purchase $600 billion in Treasury bonds. The purchase will be phased in over time at approximately $75 billion a month. The phase in period will be between now and June 30th 2011. This move will keep interest rates lower for the long term. Interest rates lower for the long term is just the news that the housing sector has been loking for and desperately needs. The housing sector has seen a lack of substantial positive movement in quite some time and reports contniue to show data hovering in the red with little sign of moving out of the cellar any time soon. Freddie Mac reports that it has lost $2.5 billion in the third quarter and also states that it could be a “considerable” amount of time before thehousing market recovers. Freddie Mac recently requested an additional $100 million in U.S. Treasury Department aid after reporting this third quarter’s losses. In the three months ending September 30th, Freddie Mac had $5.6 billion in unpaid loans out there with lenders. Lower interest rates and the ability to refinance to stop foreclosure may be beneficial to the lending giant. The Fed policy report today will hopefully be a positive catalyst. Author: Stephen Johnson
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