How Will this Affect Housing? / Senate Bill Ends Fannie and Freddie

Mortgage and Lending with Franklin Advantage Inc. NMLS Lic. # 343946

AR Forum

The topic of what to do with Fannie Mae and Freddie Mac has been discussed in Congress and the Senate for quite some time now since the financial collapse occurred. Today; however, was the "Day of Reckoning" so to speak, at least in the Senate Banking Committee.  Senate Banking Committee Chairman Tim Johnson and Senator Mike Crapo announced a bipartisan draft measure which would formally wind down both agencies with the intent of creating a new agency called the Federal Mortgage Insurance Corp.   The formal Bill will be introduced in coming days to the full Senate.

The Big Question MarkRegardless of what side of the fence that you are on in politics, this issue promises to shake up an already fragile industry.  With ever changing regulations within the financial industry over the last two years, and more recently with the CFPB's Qualified Mortgage and Ability to Repay Rules this Bill could be the "Straw that Broke the Camel's Back".

We could discuss and argue for hours regarding all the various reasons why we got into this mess.  Yet, I know one thing is for sure.  Our wonderful Politicians, both Democrat and Republican, certainly had a Big Hand in this by putting pressure on Both Fannie and Freddie to offer more affordable solutions to minorities and those they term as "Under Served".  Does anyone remember the Community Reinvestment Act?

What confuses me, the writer, is the fact that Both Fannie and Freddie seem to be back on good financial footing.  Both have paid back in Full with Dividends the amounts that they respectively received during the "Bailout".  Yet, what is mind boggling is that even though they have paid Dividends amounts exceeding their Bailout sums, they still Owe the Treasury an amount equal to the Original Bailout.

Further with pressures from Both Houses, both Fannie and Freddie have redesigned and tightened guidelines for qualification and loan purchase from lenders.  All of us in the industry are acutely aware of all of the changes that have been placed on the lending industry since 2008.  We have to live and adapt with them it seems at every turn and new day.  With burdens of new regulations, we have seen as a consequence an exit of many institutions from lending, and new costs placed on those remaining for compliance.

Housing has always been at the forefront in driving our economy.  It has driven our economy, and also been a key force in driving us out of recession when it occurs.  However, during this recent recession, housing has lagged with the over burden of all these regulatory changes.

It is my strong hope that rather than rush to judgment, our Politicians will be forced to take a cautious approach to solve this issue.  My hope is that with pressure from groups such as the National Association of Realtors, the Mortgage Bankers Association, and other industry members, that members of Congress and the Senate will be pressured to make the right decisions.  If they don't, we could be left with a new system that just might turn housing on it's ears.  After all, much of these problems stemmed from them in the first place.

To see today's announcement and article in Bloomberg published late today detailing this Bill, please refer to the link below:

Senate Bill for Fannie and Freddie

I urge all of us in the industry to let our voices be heard, regardless of opinion.  We are all in this together.  The future of Housing and our livelihood depend on it.

If you liked this article, please feel free to Re-Blog.  Get the word out!


Photo Courtesy of Master Isolated Images/

Posted by


Wayne L. Brown, NMLS # 343946
Licensed Mortgage Specialist
Franklin Advantage, Inc.
Direct: 858-997-6300

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About Wayne Brown


Wayne is a Licensed Mortgage Banker, and is based in San Diego.  With over 35 years in commercial and mortgage banking, he serves all of California and has closed more than 5,600 loans in his career.


He specializes in Conventional, FHA, VA, and Reverse Mortgages for residential lending purposes.  Both he and his company always strive to exceed each client's expectations through knowledgeable, ethical, and transparent representation to service their financial needs. 


Contact Wayne for a Free and Confidential mortgage analysis and pre-approval without obligation, or to simply get answers to your mortgage questions.  Wayne can be reached directly at 858-997-6300.

Equal Housing Lender                     

Comments (9)

Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Wayne. Fannie and Freddie need to be privatized, they paid back the bailout money and then some. Get the Government out of the mortgage business and let these companies do what they do best.

Mar 11, 2014 06:34 PM
Laura Andersen
Keller Williams Realty Partners ~ 678.462.1191 - Woodstock, GA
A HomeSOLD Name (678)462-1191 Woodstock, Georgia

With the economy just starting to rebound, this is definitely not the time. 

Mar 11, 2014 11:38 PM
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Joe and Laura

I agree completely.  We have enough going on in the industry with all the new regulations.

I hope the readers of this blog contact their Congressmen and Senators to voice their opinions.

Thanks for commenting.


Mar 12, 2014 03:53 AM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Wayne - This is very interesting that if Senate bill ends Fannie and Freddie, and the affect on the housing.

Mar 12, 2014 10:55 AM
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

"rather than rush to judgment, our Politicians will be forced to take a cautious approach to solve this issue."

When have our politicians EVER considered the long term effects of one of their idiotic bills? ACA, Gun restrictions, Bailouts, tighter lending laws/looser lending laws/forcing lending, Minimum wage laws, Taxes, Feesetc etc.


Mar 13, 2014 06:50 AM
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Thank you everyone for your comments.  My opinion only is that this will be an upward battle, especially when both Fannie and Freddie are doing well and on good footing once again........let's hope Congress does not mess this up again.

Only time will tell how our Politicians handle this.

I encourage everyone to voice their opinions to their respective legislative members!

Mar 14, 2014 12:08 AM
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Great article, Wayne.  I am torn as to the benefit of disbanding Fannie and Freddie in lieu of one governmental entity. I do not like the government having such control over the housing market.  As you mentioned, one of the largest factors that contributed to the housing "crisis" was government regulations.

Mar 30, 2014 01:18 AM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Wayne, I disagree that the CRA had a major impact on the housing crisis. It was Wall Street financial houses funding lenders that would make any and all loans to investors (flippers) even with little or no money down. And then there were the bad products such as ARMs with negative amortization and start rates below 1%. You can't blame the Community Reinvestment Act for that.

Anyway, on to the issue at hand: Close fannie and freddie. Yes. When they were just GSEs and not a wholly owned subsidiary of the federal government, they were corrupt. I don't know what they are doing now, but they aren't doing their job. A secondary market for mortgage funds needs to be competitive. As the "only game in town" they certainly don't foster competition or an expanding pool of mortgage money.

Bill Roberts

Mar 30, 2014 02:56 AM
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Thank you again everyone for your comments.

@ Bill

We could go around and around on this for days.  I only know from being around in the Lending business for years how I feel.  I saw the efforts of the likes of Barney Frank and Christopher Dodd who pushed their agendas through Congress to purportedly help the "Under served".

Later, Gorge W. Bush and his Administration tried to rein in both Fannie Mae and Freddie Mac, only to be blocked by Frank, Dodd, and other Democrats in Congress who said" Everything is Fine"

Then when things blew up in 2008, it was these same two who headed committees that have since place heavy and unreasonable Regulations on the Lending Industry.......Mostly to Loan Brokers who were used as "Scapegoats".

As I said, we could discuss this for days on end.  My main point is that Government got us into this in the first place by trying to make "Home ownership" for almost everyone.  Now, we are living the results of that.  Yes, there is blame to go around, but Government and " Corrupt" Politicians pandering to the public to get re-elected are the root cause.

Thanks for you comment.

Mar 30, 2014 04:45 AM