The Government is pulling back from providing help to the Mortgage markets….

For more than a year, the government pulled out the stops to revive home buying by driving down mortgage rates.

Now, whether the housing market is ready or not, the government is pulling out.

The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama‘s efforts to get the economy on track.

Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize home buying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.

The Dog noticed with alarm the fact that the FHA was going make things a bit harder for first time mortagage s……

Now another shoe is going to drop……

And Dog is afraid that moving in these ways may stop the slow recovery in its tracks and put the country into a second immediate down turn that would seriously hurt the country and certainly doom Obama to a one term and wreck any chance the Democrats have of keeping either houses in Congress……

Easy does it..might be the better course here…….

Update..…..Existing-home sales plunged in December, dropping lower than expected after three straight increases that were fed by a fat government tax credit.

Banks are making it difficult for some people to get loans. Joblessness in the U.S. is high, muting the economy’s recovery.

“The market is going through a period of swings driven by the tax credit,” NAR economist Lawrence Yun said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit.”

Before the big drop last month, sales had gone up three straight times. Prices and borrowing costs are low. Plus, first-time buyers can get the $8,000 tax relief.

For all of 2009, there were 5.16 million home sales, up 4.9% from 4.91 million in 2008. It was the first annual sales gain since 2005.

November 2009 existing-home sales rose an unrevised 7.4%.

Realtors had expected a pullback in December. They see a sales surge in the spring. Whether sales keep recovering after the tax credit expires depends on employment in the U.S., Mr. Yun said. “The job market remains a concern and could dampen the housing recovery,” he said.

Question?…..will there be a uptic? …or will the governments gamble to save money…. and ween the financial markets off the government money, backfire and slow home sales?