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Fannie and Freddie buy mortgages from lenders and package them into bundles of securities for investors to buy. These two companies back half of the mortgages in the USA and were taken over by the government in 2008 as the housing market collapsed into the Great Recession. Fannie and Freddie got $119.8B and $71.6B in taxpayer bailouts respectively and as things improved since 2008 they've sent $300B in dividends to the U.S.Treasury. We got our bailout money back, with interest.
Some people feel the new plan may make mortgages cost more and harder to get. Ouch.
In unraveling the Great Recession millions of foreclosed homes sold to clear the books and tons of these homes were bought up by large Real Estate Investment Trusts and wealthy individuals to put into rental markets. With the tax cuts of 2017 even more money went into the hands of people buying up homes to rent out to others and I think this is part of what's driving up housing prices in most of the desirable locations around the country.
IMO, if mortgages are harder to get then some potential homebuyers will have to rent for longer; maybe much longer.
I'm not sure how all this will work out but I suspect homeownership may be harder to achieve for a lot more people.
What are your thoughts on this?
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Last edited by Mike from back east; 09-05-2019 at 04:55 PM..
Fannie and Freddie buy mortgages from lenders and package them into bundles of securities for investors to buy. These two companies back half of the mortgages in the USA and were taken over by the government in 2008 as the housing market collapsed into the Great Recession. Fannie and Freddie got $119.8B and $71.6B in taxpayer bailouts respectively and as things improved since 2008 they've sent $300B in dividends to the U.S.Treasury. We got our bailout money back, with interest.
Some people feel the new plan may make mortgages cost more and harder to get. Ouch.
In unraveling the Great Recession millions of foreclosed homes sold to clear the books and tons of these homes were bought up by large Real Estate Investment Trusts and wealthy individuals to put into rental markets. With the tax cuts of 2017 even more money went into the hands of people buying up homes to rent out to others and I think this is part of what's driving up housing prices in most of the desirable locations around the country.
IMO, if mortgages are harder to get then some potential homebuyers will have to rent for longer; maybe much longer.
I'm not sure how all this will work out but I suspect homeownership may be harder to achieve for a lot more people.
What are your thoughts on this?
I think it will make home ownership much harder. As a landlord, that works for me. More tenants to chose from and what I call “perma-renters” - those that want to buy but just can’t quite get there - they make the best tenants.
Without getting political, the current Administration's fetish for deregulation would, in this case, result in a broadening of guidelines and a significant injection of risk into the mortgage space. (IMO)
Having worked at Ground Zero, as far as the Mortgage Meltdown went, I saw thousands of files rubber-stamped with approvals before appraisals even came in, in an effort to make Quarterly numbers. This, while we tracked our CEO simultaneously dumping his stock as fast as he legally could.
I'm not certain that it would be "back to the Old West" crazy, but the removal of oversight could place us back in position for a spike-and-plummet scenario all over again. We've already neutered the CFPB, and I could see the dissolution of that entity come to pass as well.
That kind of blanket “government is the problem” mentality isn’t helpful.
Not only is it not helpful, it is downright foolish. We need to remember that regulations and laws were enacted in an attempt to correct abuses and unethical behavior of some towards others. I'm the first to admit that regulations sometimes have gone too far, but the wholesale abandonment of protections, merely because anti-government sentiment might be popular, can only set us back as a society. Regrettably, government is sometimes needed to protect us from the predators among us. The alternative is anarchy.
Jack, thanks. What impacts if any do you foresee from the proposed changes?
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Any removal of the government from anything is a good thing.
Shows a complete lack of understanding... you might want to do some light reading before you speak in absolutes on subjects you are clearly not grasping.
Regulatory... compliance... stewardship. Think Gordon Gekko.
So, although "removal of the government" makes sense in many cases this is definitely not one of them.
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