Much legislation has been introduced and discussed about the problems with Fannie Mae and Freddie Mac, the two government sponsored agencies (GSE's). Currently, these two agencies own 90% of the mortgages in this country. More stability in the securitization of mortgage debt and the increase in the privatization of the secondary market will alleviate many of these issues. But when will we get there? 2016? 2026? No one knows for sure. Recent proposals in Congress have suggested ways to do this. But they seem counterproductive.
Today, for example, the House voted to extend the payroll tax cut. So it looks like it will alleviate people's paychecks and continue to supply jobless benefits. But like most economic stimulus bills in Congress, it seems to effect the middle class the most. In this case, the bill (HR 3630) mandates the increase of guarantee fees charged by the GSE's. These fees are charged by the GSE's to lenders for packaging and selling mortgage-backed securities to lenders. It looks like the increase in these fees won't be terribly large, but my opinion is that we will see lenders turn around and increase fees to borrowers. The good news is that these fee increases will hopefully bring private investors back into the mortgage market. Because de-regulation of this industry is necessary so that the risk pendulum can swing back to somewhere near normal.
Senator Scott Garrett from New Jersey talked with CNBC earlier about the proposed reforms...take a look HERE!
I look forward to your feedback....
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