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Overhaul Fannie and Freddie? Why?

March 7th, 2013 Comments off

As washingtonpost informs MHProNews, while Fannie Mae and Freddie Mac have been vilified for allegedly causing the financial meltdown, for being bailed out by the government to the tune of $131 billion, and for taking business from private firms, neither the Democrats nor the Republicans are actively doing much to change the GSE landscape. While they remain for-profit entities, they are backed by the government, and despite the criticism, they were the only home finance game in town in 2009 when banks were not interested in making home loans. As Neal Irwin says, the housing collapse would have been much worse had Fannie and Freddie not been around. The reason the overhaul has not happened is because there are too many vested interests in keeping the system as it is. Accounting for 90 percent of U. S. mortgages keeps originators, servicers, lenders, banks, and builders pretty busy, not to mention the contributions from the GSEs to political campaigns.

(Image credit: Federal Housing Administration)