Categorized | Finance and Mortgage

Fannie Mae and Freddie Mac Lack Support from Government

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The United States government is not exactly fond of Fannie Mae and Freddie Mac. In fact, the government as a whole would actually prefer to sever ties with them. However, doing that is no easy task.

 

Fannie Mae and Freddie Mac currently support roughly sixty percent of new home loans in the United States. Since 2008, the two mortgage giants have cost taxpayers as much as one hundred and fifty billion dollars. While the United States government is looking to reduce the overall environment of the two during the home loan process, officials have limited options.

 

The fact that the United States is currently in an election year makes dealing with the two mortgage giants somewhat complicated. Both Fannie Mae and Freddie Mac are still utilized for nearly ninety percent of mortgages. Because the market is still in a weakened state, there exists the fear that eliminating the two mortgage giants could be detrimental to the state of the housing market and economy in general.

 

The current administration is set to announce in the next few weeks how it intends to work with Freddie Mac and Fannie Mae going forward. If they stick to their initial plans that were laid out in 2011, there are possible strategies that they might take.

 

The government may opt to eliminate federal involvement within the two mortgage companies. Most don’t believe that that action will happen. They may create a new housing benefit for low-income borrowers and veterans, or they may require lenders to purchase insurance from a private insurer before they can also be government insured.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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