Trump vs Fannie Mae and Freddy Mac
Fanny Mae and Freddy Mac are the nicknames for two mortgage giants that back about 70% of U.S. mortgages and have been under government conservatorship since the 2008 financial crisis.
“Fannie Mae and Freddie Mac don’t issue mortgages directly. They purchase loans from lenders and package them into securities sold to investors. This process ensures a steady flow of capital to mortgage markets and supports affordable loan rates.
“Privatizing these companies could disrupt this system. Investors might view mortgage-backed securities as riskier without explicit government guarantees, leading to higher borrowing costs.”
A possible compromise would be to charge the companies a fee for government guarantees in times of crisis. Such a measure could mitigate risks while maintaining some level of market stability.
On the evidence, I’d say that the goal for the Trump Administration is chaos, not stability. Here’s hoping there are enough adults in the room to prevent that.
Trump and the future of Fannie Mae and Freddy Mac
“Fannie Mae and Freddie Mac don’t issue mortgages directly. They purchase loans from lenders and package them into securities sold to investors. This process ensures a steady flow of capital to mortgage markets and supports affordable loan rates.
“Privatizing these companies could disrupt this system. Investors might view mortgage-backed securities as riskier without explicit government guarantees, leading to higher borrowing costs.”
A possible compromise would be to charge the companies a fee for government guarantees in times of crisis. Such a measure could mitigate risks while maintaining some level of market stability.
On the evidence, I’d say that the goal for the Trump Administration is chaos, not stability. Here’s hoping there are enough adults in the room to prevent that.
Trump and the future of Fannie Mae and Freddy Mac
No idea what should be done, but another frustratingly incomplete linked article. The article mentions that mortgages could increase $1800 to $2800 per year. One presumes that this is the price of incurring the mortgage risk without government guarantee. But there is no mention of the impact of government “derisking” its operations. Seems to me this is a net zero situation. Maybe we want to continue as currently, but I at least take with a grain of salt the input of folks whose business is easier so long as a good portion of the risk is slid off to taxpayers.
What risk would Fannie or Freddie have when backed by the Feds? As it is, no mortgage is given without a thorough examination of the property and the loan takers. Takers may be riskier but then the property itself may cover such risk.
Am I worth a 3% down as far as a mortgage? I was and we were approved based on SS income, our finances, and the overpriced value of the home. Half of the mortgage payment goes to principal. If we sold today, we would get our money back.
At the same time, the builder of our home is selling similar homes at a lesser price. Why would someone buy my home, if they can get new for less?
The bigger issue is with the builders who over extend and build with poor quality having cut corners.