From the Forum: Should Fannie and Freddie go?

by Ryan Smith10 Sep 2014
A report this week that shutting down Fannie and Freddie would save the government billions had MPA readers up in arms. The Congressional Budget Office report said that the government could reduce direct spending by $60 billion over 10 years by dismantling Fannie and Freddie and replacing them with a new federal mortgage insurer.

Sen. Bob Corker (R-Tenn.), who’s co-sponsoring a bill that would do just that, said dismantling Fannie and Freddie in favor of a new insurer would be a “win-win” for taxpayers. MPA readers, however, weren’t so sure.

“Bob Corker should put a cork in it,” said reader Cheryl M.”Talk about what you know, not what you don't.”

“Eliminating Fannie Mae and Freddie Mac will increase the cost and the rate for consumers who are qualified and have strong credit,” said reader Edward. “I have not seen anything done right by the government!! Right now the Treasury is profiting from Fannie and Freddie in billions and they are not costing the government anything!”
 
Got something to say? Check out the MPA Forum, where mortgage professionals can discuss current issues, get advice tough loans and more. Visit mpamag.com/forum and join the conversation!

“Where do they come up with this stuff?” asked reader Junior. “They have been collecting dividends for years, where's that money? During the TARP bailout they received dividends and TARP was repaid. Where is that money? There is already a government sponsored mortgage entity called FHA. To get rid of Fannie and Freddie would just raise the costs to consumers...again.”

And MPA forum poster had just one question:

“Replace FNMA and Freddie with what? No one has a practical answer to this question. Creating a void in home financing will cause a depression.”

What do you think? Is the bipartisan fervor to dismantle Fannie and Freddie misguided? Or is it time for the government to get out of the mortgage business altogether? Let us know your thoughts in the comments below.
 

COMMENTS

  • by Bill Jacobs | 9/10/2014 9:46:23 AM

    Those of us who were involved in this business during the 1979-82 debacle when interest rates on home mortgages reached 16% interest rates, do remember that FNMA had been weakened by Federal interference, FHLMC was S&L's primarily, and the commercial banks ruled the market. I would not want to see the existing commercial "big" banks come forward again as the hero(s) of this vital industry. The profit motive reigns supreme in their eyes, as it should, but both of the GSE's have dual motivations, profit yes, public duty and responsibilties also yes.

  • by Cheryl m | 9/10/2014 10:10:57 AM

    I also remember Freddie and Fannie were private at one point until the government got involved (because of the "big" banks) now that they're making money the government is taking the profits. If the government wants out, then make f&f private.

  • by Daniel H. | 9/16/2014 1:21:10 PM

    The drive to eliminate F&F is being pushed by the same banks that caused the financial meltdown in the first place. They are just drooling at the prospect that they could end up with F&F's business. Talk about too big to fail.

Poll

Is TILA-RESPA a good or bad thing long term?