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Top regulators: Congress needs to act on housing finance reform

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Mortgage Professional America | 27 Jun 2016, 06:15 AM Agree 0
Leaders of the government’s top regulatory agencies say Congress needs to take the lead in reforming the country’s housing finance system
  • | | 27 Jun 2016, 07:39 AM Agree 1
    Fannie and Freddie did not cause the housing crisis. Mortgage mortgages from TBTF banks with default rate as high as 30% is the root cause. In fact, the Fannie and Freddie model is proven and extremely cost efficient (at about 0.15% overhead). It ensures liquidity to the mortgage market and low mortgage payment to millions of US households for decades.

    Any other alternative will imply an extra 1-1.5% monthly mortgage payments. And, the so-called private market alternative is to return the mortgage market to the TBTF banks which is high risk. During the housing crisis, all private funds suddenly disappear.

    Unless we are absolutely clear that the alternative is better than the current model, we should not replace Fannie & Freddie.

  • | | 27 Jun 2016, 08:46 AM Agree 1
    Housing Finance Reform is code for replace Fannie Mae & Freddie Mac. There is no other cost effective alternative to the twins and handing their business over to the banks would be a disaster. Hopefully we learned that from 2008. Banking execs have infiltrated our government, are writing/directing our legislation and creating a huge conflict of interest problem that will only get worse until sterilization is put into effect to purge them from the system.
  • TH911 | | 27 Jun 2016, 09:05 AM Agree 1
    Fannie & Freddie did not cause the housing crisis, but they are responsible for doing nothing to prevent it. It took Ed Demarco alerting them to the damage manipulated LIBOR did to the GSEs after FHFA assumed conservatorship. And it took shareholder litigation to expose systemic risk assumption and inadequate risk management controls under pre-conservatorship management.
  • | | 27 Jun 2016, 10:04 AM Agree 1
    How could Fannie & Freddie do anything to prevent the housing crisis when HUD was forcing them to meet sub-prime (alt-A, CRA, no-doc) affordable housing goal quotas which exceeded 50% of their mortgage purchases?
  • Nathan | | 27 Jun 2016, 12:34 PM Agree 1
    "Approaching the limits of their ability to act" == "These lawsuits are really heating up"

    The whole sham conservatorship is falling apart and they haven't gotten what they wanted, which is to take over the GSE's without compensating the owners. This whole thing would be hilarious if it happened in Russia or China. Unbelievable that it's happening here.

    How much do you want to bet that the "Executive Privilege" claim is covering up old-fashioned illegal activity and collusion?
  • gdacostap | | 27 Jun 2016, 07:24 PM Agree 0
    Free Fannie! Free Freddie!
  • | | 28 Jun 2016, 07:54 AM Agree 0
    "mortgages from TBTF banks with default rate as high as 30% is the root cause."

    Actually, the default rates in subprime RMBS were closer to 70% than 30%.
  • William R. Maloni | | 28 Jun 2016, 02:22 PM Agree 0
    The last time I checked it was the nation's largest banks which were found guilty of manipulating LIBOR (the London Inter Bank Borrowing Rate) which governs virtually all US adjustable rate mortgage indexes.

    I don't think Ed Demarco hardly played much of a role in blowing a whistle on the major banks, which coincidentally, held most of those ARMs on their books because they prefered them to originating fixed rate mortgages (FRMs) which most American borrowers preferred.

    That exposure was done, initially, by Wall Street Journal (in 2011) and then later Treasury, Fed,and OCC officials. (Many in Congress felt that Tim Geithner, who ran the New York Fed before he became President Obama's Treasury Secretary, also was aware of the bank deceipt.

    So the banks, which most GSE-critics see as succeeding Fannie and Freddie were fraudulent in this instance, too. Add that to several others, laundering Mexican drug money, working with Middle Eastern extremist elements, which have made headlines and caused the banks to pay mammoth fines to the US financial regulators and you have evidence why the banks would be lousy stewards of the primary and secondary mortgage markets.

    The bank inclination is to corner cut and cheat and the facts are there for all to read/see.
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