Fannie and Freddie to be abolished?

By
Real Estate Agent with Sand Dollar Realty Group, Inc. BK627826

Obviously something needs to be done with these 2 mortgage giants.  Fannie Mae and Freddie Mac have been under the receivership of the federal government since Fall of 2008.  Odds are high that either Fannie or Freddie own the 1st mortgage on your home right now. 

Congressman Barney Frank, chairman of the House Financial Services Committee, is calling for the whole secondary mortgage market system to be scrapped and to come up with a new one.  USA Today article.

To me the Fannie / Freddie system seemed to work well until all these non-conforming and sub-prime loans came into the picture.  If we could just keep those type of loans away from Fannie and Freddie, I think the system would work just fine.  There's not much anyone can do to prevent prices from falling in half anyway. 

Maybe these 2 giants need to be broken up similar to what happened to AT&T in the 1980s.  Or maybe all the bad loans need to be sold off to some other entity in order to deal with them directly. Regardless the government shouldn't be controlling this much of the real estate industry. 

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Re-Blogged 2 times:

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Topic:
Mortgage / Finance
Groups:
Realtors®
Politics And Real Estate
Foreclosures
Silent Majority
Tags:
freddie mac
fannie mae

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Rainer
140,201
Tony Hager
United Realty Texas - Denton, TX
Broker

As always everything did seem to be working just fine until the Government stepped in and tried to put everyone that was breathing and didn't already own a home into one.  Trouble is, who would buy the bad loans now from these two?  Seems we are just going to have to weather the storm until most of these bad loans are eventually foreclosed or hopefully economy will pick up enough to allow some to actually catch up and stay in their homes.

Jan 26, 2010 02:50 AM #1
Rainer
16,551
Ricardo "Ric" Ruiz del Vizo
Optimus CREIA / KW Commercial - Sarasota, FL
Your 1031 and Net Leased Investment Source

They need to go and put lending back where it is supposed to be - the private market!  They hinder competition and allow politics to outweigh good lending practices.

Jan 26, 2010 02:52 AM #2
Rainmaker
1,020,471
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

United - There are plenty of people that would buy up the bad loans if they were sold at a discount.  Say 30 cents on the dollar.  That's all many of them will be worth anyway once they short sale or go REO.

Jan 26, 2010 03:14 AM #3
Rainmaker
300,375
Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes

I found that interesting when I read it yesterday too. I am interested to see what the government and their infinite wisdom come up with next. 

Jan 26, 2010 03:25 AM #4
Rainer
129,004
Ron Brown NMLS #270845
NMLS ID: 40831 - Federal Way, WA

Fannie & Freddie only got into the sub prime business because they were (at the time) private corporations responsible to their shareholders in the form of profitability, and they were being left behind in the MBS fueled housing bubble.

Now that they are "owned" by the government, it will be impossible to unwind them the way the free market system should have.  These giants were benefiting from a de facto government backing, and investors were happy to get returns on their investment equal to genuine risk capital while all the time knowing they were implicitly backed by the taxpayers.  All the benefit, and none of the risk, thanks to you, and I the taxpayer. 

Ask Barney who would shoulder the losses, and who would stand to gain under his "plan."

Jan 26, 2010 12:07 PM #5
Rainer
293,421
Melissa Anderson
Mortgage of Texas & Financial - San Antonio, TX

COMMUNITY REINVESTMENT ACT..............forcing lenders to give loans to folks who could not qualify based on their credit or income.

I was an underwriter back then, and could not believe that I was able to approve a loan just because someone paid their cell phone bill and car insurance on time, along with rent.  That was the MY COMMUNITY HOME LOAN offering 100% financing and 6% seller contributions.  That is bull.

THAT WAS OUR GVMT stepping in to help EVERY AMERICAN HAVE THE DREAM OF HOME OWNERSHIP.

Sorry, home ownership is not a right.  It is a goal.

Now Fannie and Freddie are the only ones to blame?  Yes they screwed up big time.  Others screwed this up as well.

 

Jan 26, 2010 12:35 PM #6
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Rainmaker
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Rob Arnold

Metro Orlando Full Service - Investor Friendly & F
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