What if Fannie and Freddie Were Eliminated?

Print Friendly and PDF

Two informative posts from the Heritage Foundation:

What if Fannie and Freddie Were Eliminated?

EXCERPT: Government intervention by way of Fannie Mae and Freddie Mac may have given more Americans the keys to their own homes, but they bought homes they could not afford and in a marketplace that could not be sustained. As Heritage showed in an earlier paper, Fannie Mae and Freddie Mac can be phased out without disrupting the housing recovery. A better way forward is to phase out Fannie Mae and Freddie Mac and let the home market find a healthy and sustainable equilibrium.

Read the article

* * * * *

A Housing Market Without Fannie Mae and Freddie Mac: Effect on Home Prices

EXCERPT: Notwithstanding the roots of the crisis, financial institutions—such as the Federal National Mortgage Association (FNMA or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLlMC or Freddie Mac)—fueled an excessive expansion of credit in the housing sector, shifted the demand for real estate to the right, and caused home prices to overshoot their underlying market equilibriums. Although these government-sponsored entities (GSEs) were established with the primary goal of developing a secondary mortgage market to increase homeownership among low-income groups and underserved areas, they became involved in profiteering and mortgage-backed securities (MBS), which left them far behind their primary goals.

Read the article

 

Print Friendly and PDF