There is no question that Fanniemae and Freddiemac are broken. To spite billions in losses, their investors are still being paid dividends at the expense of the american tax payer.
The restructuring of the two mortgage giants was supposed to be announced today by the Obama administration. However, it has been delayed until the end of February because no one is sure what role these government sponsored enterprises should take going forward.
Many people would like to see the government having less of a roll in housing finance. However, if there were no government involvement, the average down payment would be at east 30% and the rates would be a lot higher due to the risk to private investors.
A solution would be funding from private investors backed by a government insurance fund which would collect a fee. There would be tighter qualifing guidelines so these mortgages would have higher quality standards for repayment.
Hopefully, we will know better at the end of February.
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