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.
Regardless 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:
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.
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