Closing Fannie & Freddie
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Thread: Closing Fannie & Freddie

  1. #1
    Senior Member Gerry Clinchy's Avatar
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    Aug 2007

    Default Closing Fannie & Freddie

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    This could be one of the few ideas I agree with from Obama.

    However, I can see things that could cause problems for the economy if the closing is not well structured.

    Fannie and Freddie currently own or guarantee half of all U.S. mortgages and back nearly 90 percent of new ones.
    If the private sector is going to be responsible for all loans, they will revert to sensible underwriting ... not the free-wheeling stuff that caused the bubble that got us into this whole mess. This should put at least a temporary lid on the still-struggling housing market. I have a client right now that is a good risk with heavy down payment, who is having a devil of a time getting qualified for $150,000 mortgage. This is not a govt-insured mortgage. She gets $X income from her former husband, and payments have been regular and timely (not alimony, but rather getting her share of their marital assets in installment payments). The mortgage lender will not count this income since the way the agreement with ex is written does not fit their "guidelines".

    So, in some cases, good buyers will have a tougher time getting mortgages.<br>
    Also this is coupled with Obama's already stated intention to compel various areas to provide "affordable" housing for low-income individuals, in the interest of "diversity" within communities.

    I might suspect that the govt will end up subsidizing the "affordable" housing.

    I also am wary that Mr. Holder will find a way to lean on the lenders if he thinks they are discriminating against low-income buyers. It's been done before ... another part of the bubble problems, when lenders were compelled to give loans that made no sense based on income v. loan amounts. Would anyone be surprised at Holder doing this?
    The president will also look to link his housing proposals to immigration reform, his top second term legislative priority. Officials said he will argue that legal immigration can stimulate the housing market, noting that immigrants accounted for 40 percent of new homeowners nationwide between 2000 and 2010, according to the Obama administration.
    Without specific info on those loans, this isolated statistic could be misleading. However, considering the number of defaults on loans written from about 2004 to 2008, these same people must also represent a significant number of the defaults? Would make some sense, but more info is needed.

    I just wonder if a not-so-bad idea on the surface could be turned into another nightmare in its implementation. The idea of providing health care insurance to those with pre-existing conditons was not a bad idea. However, nobody expected that implementing that idea would result in turning everybody else's health insurance into such a nightmare.

    NOTE: This website is still doing some funky things. Had trouble posting this new thread. Was putting in some extra characters & such. Even refused to post the new thread at first with a "bad gateway" message.
    Last edited by Gerry Clinchy; 08-06-2013 at 11:20 AM.
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  3. #2
    Senior Member luvmylabs23139's Avatar
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    Jun 2005
    North Carolina


    The gov't does not belong in the mortgage business period. The whole housing bubble crap started way back with Carter.
    This country needs to go back to flat out allowing banks to determine on their own how much they want down and whether or not a borrower is a good risk. The good risk part is crucial.
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