In a report published by New York City-based investment banking firm Keefe, Bruyette & Woods, three years is the minimum amount of time it will take for Congress to reach an agreement over the future of Fannie Mae and Freddie Mac
. The GSEs own or guarantee almost half of all U.S. mortgages.
Credit availability is so tight that even former Federal Reserve Chairman Ben Bernanke can't get his mortgage refinanced
, despite earning a reported $200,000 to $400,000 for a speech. According to real estate information firm CoreLogic, credit availability for home purchases in May was about a third of what it was in 1998.
Following the housing bust, banks became hesitant about lending because they had to repurchase billions of dollars of bad mortgages they sold to Fannie Mae, Freddie Mac and private investors. Banks are afraid if they loosen their standards, the same thing will happen again and want legislation to protect them.
Banks aren’t the only ones who want protection; bond investors also want legislation to protect them from banks.
Earlier this year, Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) introduce a bill that would dismantle Fannie and Freddie
and replace them with a new federal mortgage insurer.
The bill has received opposition and was thought to be dead in the water when six key Senate Democrats withdrew their support
. The group said they felt the bill needed a major revision.
Currently, Americans are experiencing the tightest credit market in 16 years. And according to a new report, they’ll have to wait at least three more years until it becomes easier to get a mortgage.