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One of the issues with Freddie and Fannie is that they were privately owned but back stopped by the government (not explicitly.) So when they were taken over by
by wheaties 10y ago
One of the issues with Freddie and Fannie is that they were privately owned but back stopped by the government (not explicitly.) So when they were taken over by the government, the idea was that something else would take their place. There isn't an alternative currently and structurally within the private sector to do that. Mortgage REITS are also not the answer, they are too dependent on short term funding; funding that can and will dry up at a moments notice.
- pcarolan 10y agoYep, the government's goal is to promote stable home ownership. Investors should invest in mortgage brokers if they want the socialized benefits of the governments policy, because the loans just end up in fannie/freddie after origination and servicing fees are collected. The government wants control because they hold all the risk.
- toomuchtodo 10y ago> Yep, the government's goal is to promote stable home ownership. Which I don't understand, because mobility is more important in the current economic jobs climate. With cheap mortgage money, you're subsidizing people handicapping their ability to earn an income if their job evaporates. The federal government needs to incentivize remote work through tax policy if it continues encouraging homeownership (which I agree is good from a societal perspective), or remove all support from the residential real estate market and allow the free market to be free (ie remove the subsidized benefits of buying vs renting, let landlords absorb the risk of large capital outlays for housing units).