“Congress is in discussion to determine what to do with Fannie and Freddie,” Marc Israel, president of MiT National Land Services, told Mortgage Professional America. “Clearly, if there is dissolution of Fannie and Freddie or changes to their influence, more services would go to the bigger banks.”
The future of the GSEs, which were placed into conservatorship following the subprime mortgage crisis, remains up in the air.
But if the big banks have their way, the industry could see the closure of both, according to a recent New York Times report
“A review of lobbying records, legal filings, and internal emails and memorandums, as well as housing officials’ calendars and White House and Treasury visitor logs, illuminates the banks’ effort,” the Times report said. “Assisting in this work, the documents show, is a group of high-level housing finance specialists who have moved back and forth between public service and private practice in recent years.”
It remains to be seen what plans each of the candidates have for the future of both Fannie and Freddie, but it’s an issue that should be top-of-mind for industry players, according to Israel.
“If they go away, it dramatically changes everything; it means the big banks will have to hold more mortgages on the books and there could be a resurgence of sub-prime lenders, which led to the collapse,” Israel said. “It will impact how individual brokers do business.”
Fannie and Freddie could become things of the past, depending on who takes office next year, and one industry veteran explains why originators should care.