Despite the rhetoric, the Obama Administration is NOT trying to get rid of Fannie and Freddie. Rather, they want the Republicans to fight it out with homebuilders, realtors and other parties interested in the mortgage guarantee from the Federal government. In fact, the Dodd-Frank Act created an agency (without oversight) that will ban any mortgage that isn’t consumer friendly. In other words, we are stuck with the 30 yr fixed-rate mortgage (FRM) and taxpayers are on the hook for the losses.
Thanks for jumping in here, but I have to respectively disagree with your statement that “Fannie Mae and Freddie Mac does not help the mortgage market…” It seems to me that Fannie and Freddie enabled an unsound system with their guarantee that they would purchase any crap that mortgage originators put together. That had the effect of relieving mortgage originators from the responsibility of loaning only to those with the ability to pay and with sound collateral.
The mere existence of Fannie and Freddie has totally altered the former (and modern Canadian) system whereby bankers actually cared about soundness and actually held mortgages until maturity.
Thanks for posting my interview on Flopping Aces.
Despite the rhetoric, the Obama Administration is NOT trying to get rid of Fannie and Freddie. Rather, they want the Republicans to fight it out with homebuilders, realtors and other parties interested in the mortgage guarantee from the Federal government. In fact, the Dodd-Frank Act created an agency (without oversight) that will ban any mortgage that isn’t consumer friendly. In other words, we are stuck with the 30 yr fixed-rate mortgage (FRM) and taxpayers are on the hook for the losses.
Dr. Sanders–
Thanks for jumping in here, but I have to respectively disagree with your statement that “Fannie Mae and Freddie Mac does not help the mortgage market…” It seems to me that Fannie and Freddie enabled an unsound system with their guarantee that they would purchase any crap that mortgage originators put together. That had the effect of relieving mortgage originators from the responsibility of loaning only to those with the ability to pay and with sound collateral.
The mere existence of Fannie and Freddie has totally altered the former (and modern Canadian) system whereby bankers actually cared about soundness and actually held mortgages until maturity.
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