FANNIE/FREDDIE To Become "History"??
The governments plan to "ease" itself out of the mortgage business are a puzzlement. Or, they are above my pay grade to comprehend.
One part of the proposed plan as of now is:
"It would continue to increase the fees charged for government
guarantees to help encourage private companies to take up the slack."
Seems that, no matter what the subject matter, increasing costs to the consumer is at the bottom of the plan. It's as though, "If you can't solve a problem, just raise the cost to the consumer".
That's not all. The plan to east Fannie/Freddie OUT include:
- It will create a new company — completely separate from Fannie and Freddie — that would combine many of the back-end operations of the the two companies.
- It would continue to increase the fees charged for government guarantees to help encourage private companies to take up the slack.
- It will direct Fannie and Freddie to each sell at least $30 billion of the mortgage-backed securities they hold to private investors, taking taxpayers off the hook for those.
- It will reduce the companies’ presence in the multifamily housing business by 10 percent.
MISSING FROM THE PLAN??
Analysis of the role of the RATING AGENCIES, Moody's, Standard & Poor's, Fitch, etc. has not been clarified. Will Fannie and Freddie be mixing BBB and AAA instruments as in the past? Will the rating agencies be giving them a high rating as in the past.
IS THERE ANY ASSURANCE THAT PRIVATE INVESTORS WILL PICK UP THE SLACK WHEN AND IF FANNIE/FREDDIE depart???
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, serving home buyers in MD and Northern Virginia.
"Honey, why can't our home loan get approved? It's been weeks."
"I'm not sure Dear, the mortgage company said it has something to do with the SECONDARY MARKET. Apparently, they are having trouble finding investors to buy our loan.
"But, Julie and Dan didn't have any trouble when they bought their home.'
"Apparently, things were different when Fannie Mae was around."