The Federal National Mortgage Association (Fannie Mae, created in 1938) and the Federal Home Loan Mortgage Corporation (Freddie Mac, established in 1970) are government-sponsored enterprises (GSEs) in their eighth year of conservatorship under the FHA.
That is an exceedingly long arrangement, by historical standards. And it’s an arrangement that the incoming President Donald J. Trump and his Treasury Secretary pick, Steven Mnuchin, hope to end. Depending on who you ask, that could have huge ramifications for housing markets, or none at all.
Spencer Cowan, a research consultant and former head of the Woodstock Institute’s applied research for economic security program, says that in order to speculate on the fate of Fannie Mae and Freddie Mac, it is imperative to first understand the role they play in our current mortgage market.
“You need to know how it all works,” Cowan says.
I’ve heard enough. Just put it back the. Way it was. When something bad. Happens the. Uncle Sam. Will help. .every other 2008 bailout was. Returned. To. Businesses as usual.. So be it for FANMA
I have worked on/written about these matters in the Congress, at federal regulatory agencies, and for more than 20 years as Fannie’s chief lobbyist, before retiring in 2004.
For the past nine years, I’ve written a financial services and GSE blog.
My single greatest piece of advice to the Realtors who read about these issues is to kick in the butt your NAR execs in DC, who have tried to placate the Obama Admin and opposed resurrection of the GSEs. It’s that frustratingly simple.
Look at its record, not what they say to you in you conferences or breakout sessions.
The NAR is powerful but seems to want to play footsie with the big banks–and Senate baddies like Bob Corker (R-Tenn.)– and others who have their eye on the GSEs revenue not what best for mortgagors or homebuyers.
They will be utilities under the HERA statute of 2008, operating safely with more capital and a federal backstop to keep rates lower. The old GSEs are gone already, and no one wants the Big Banks to take over this marketplace.
Ideally, Congress would pass a small bill with some tweaks, though this is not necessary. What IS necessary is to keep Big Banks from taking over and harming consumers, Realtors, small lenders, and inner-city neighborhoods.