Tuesday, August 17, 2010

Fannie And Freddie

FLG heard somebody from some housing magazine on the radio today say that whatever the politicians say about reforming Fannie and Freddie there is no way to get around that we need them to finance mortgages because they currently finance 90% all mortgages.

This is ridiculous. First, there were mortgages in this country before Fannie and Freddie. Second, mortgages available in other countries and they don't have quasi-public/public corporations helping to finance their mortgages.

Without Fannie and Freddie:
Borrowing costs would be higher.
Downpayment and income requirements would be higher.
There'd probably be no 30 year fixed mortgages.

These would have knock on effects on housing prices, but it's not true that the 90% of people whose loans are financed by Fannie and Freddie wouldn't be able to get loans and almost nobody would be able to buy houses.

1 comment:

Anonymous said...

OK, guessing game time. Guess who said this this morning?

“They should be abolished,” ______ said in an interview on Fox Business, when asked whether the mortgage giants [Fannie Mae&Freddie Mac] should be elements in housing market reform. “They only question is what do you put in their place,” _______said.

The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, ______ said in the interview.

“There is no more hybrid private-public,” _______ suggested. “If we want to subsidize housing then we could do it upfront and let the budget be clear about that.”

Why does ________ see the need to stop federal home-ownership initiatives?

“There were people in this society who for economic and, frankly, social reasons can’t and shouldn’t be homeowners,” _______said. “I think we should, particularly, stop this assumption that you put everybody into homeownership.”

Figured it out yet? If not, here's another thing he said,

"President Obama, whom I greatly admire ... when the economic recovery bill — we're supposed to call it the 'recovery bill,' not the 'stimulus' bill; that's what the focus groups tell us — he predicted or his aides predicted at the time that if it passed, unemployment would get under 8 percent," _______ said Tuesday evening during an appearance on the Fox Business Network. "That was a dumb thing to do."

So who is it?
Anyone? Anyone?

(Barney Frank)

Mrs. P

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