NEW YORK (CNNMoney.com) -- The government finally realizes that it has to address the problems in the housing market. Unfortunately, it seems officials are considering going at it the wrong way.
According to several reports, the Treasury Department is considering a plan to drive down mortgage rates as low as 4.5%. It would do this by purchasing mortgage-backed securities from the now essentially nationalized mortgage financing giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
Low rates, the thinking goes, would make mortgage payments more affordable and get home sales moving again.
The plan misses on a few fronts, however.
"The level of mortgage rates is not the main problem in the housing market," said Dean Maki, co-head of U.S. economics research with Barclays Capital.
http://money.cnn.com/2008/12/04/markets/thebuzz/?postversion=2008120418
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