It appears that those in charge of Fannie and Freddie are going to prevent them from introducing new loan products into the market for awhile. They are preparing for the expiration of the Federal Reserve’s mortgage purchase program.
The FHFA is attempting to reduce the two organizations, and claim that the new role should be focused on expansion of loss mitigation programs and recovery, instead of expansion. The goal is to move them away from being substantial portfolio holders in the market, since their existence is only because of taxpayer buyout.
I would certainly like to know your thoughts below.
Both of these giants have borrowed billions of dollars from the government, just to survive. Those are taxpayer dollars. The FHFA called these numbers “troubling”.
The only hole in the argument seems to be following: even the FHFA admits that almost all non-governmental organizations have withdrawn their capital from the housing market. Fannie and Freddie have invested more. If they now begin to reduce their exposure, who’s going to fill the void? What if private capital and investment doesn’t replace them in the market?
Of course, the CEO’s of these companies received multi-million dollar bonuses for their “effort” in the recovery. Recovery? Have they looked around lately? I don’t know about you, but I’ve always been taught that you get paid for a job well done. This job is NOT done yet.
If you think about it, aren’t they somewhat at fault for this same mess we’re in? I guess I’m confused…
Let me know your thoughts by leaving a comment.
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David Corbaley
