Obama housing plan to end Fannie, Freddie

[I AM NOT THAT GUY 5,715]

Fannie Mae and Freddie Mac would cease to exist under the housing plan released Friday by the Obama administration.

The highly anticipated report lays out a vision for ultimately winding down the troubled government-sponsored enterprises by inviting private dollars to crowd out government support for home loans. It lays out three options for the nation's housing market after Fannie and Freddie are wound down, with varying roles for the government to play.

It comes in response to a housing crisis that nearly brought down the financial system and ushered in the worst recession in a half-century.

"Our plan helps ensure that our nation's economic health will not be jeopardized again by the fundamental flaws in the housing market that existed before the financial crisis," the report from the Treasury Department and Department of Housing and Urban Development states.

Going forward, the report says, the government's role should be limited primarily to oversight and consumer protection, though it would continue to provide some targeted assistance to the housing market. It would fall to private institutions to be the primary source of mortgage credit and "bear the burden for losses."

"We are going to wind down Fannie and Freddie and gradually, but substantially, reduce the government's broader footprint in the housing market" said Treasury Secretary Timothy Geithner Friday. "We think there’s very broad consensus both on [Capitol] Hill and within the broader housing finance community about the need for a transition to a much smaller role for the government."

However, the plan rejects the notion of a housing system where the government does not assist low and moderate-income borrowers. Some Congressional Republicans had advocated for a wholly private housing system, with no government influence.

http://thehill.com/blogs/on-the-money/banking-financial-institutions/143445-administration-housing-plan-no-more-fannie-freddie

[Mr. Big Dog 10,747]

Fannie Mae and Freddie Mac would cease to exist under the housing plan released Friday by the Obama administration.

Smart move. Now that Obama wants to end Fannie and Freddie, the GOP will work to keep them around.

[Pooky 3,792]

FM² - Buh Bye!

[Dan J 277]

Fannie Mae and Freddie Mac would cease to exist under the housing plan released Friday by the Obama administration.

The highly anticipated report lays out a vision for ultimately winding down the troubled government-sponsored enterprises by inviting private dollars to crowd out government support for home loans. It lays out three options for the nation's housing market after Fannie and Freddie are wound down, with varying roles for the government to play.

It comes in response to a housing crisis that nearly brought down the financial system and ushered in the worst recession in a half-century.

"Our plan helps ensure that our nation's economic health will not be jeopardized again by the fundamental flaws in the housing market that existed before the financial crisis," the report from the Treasury Department and Department of Housing and Urban Development states.

Going forward, the report says, the government's role should be limited primarily to oversight and consumer protection, though it would continue to provide some targeted assistance to the housing market. It would fall to private institutions to be the primary source of mortgage credit and "bear the burden for losses."

"We are going to wind down Fannie and Freddie and gradually, but substantially, reduce the government's broader footprint in the housing market" said Treasury Secretary Timothy Geithner Friday. "We think there’s very broad consensus both on [Capitol] Hill and within the broader housing finance community about the need for a transition to a much smaller role for the government."

However, the plan rejects the notion of a housing system where the government does not assist low and moderate-income borrowers. Some Congressional Republicans had advocated for a wholly private housing system, with no government influence.

http://thehill.com/blogs/on-the-money/banking-financial-institutions/143445-administration-housing-plan-no-more-fannie-freddie

Being that the housing market has had government involvement since the 1930's, pulling out now would have effects across the entire housing market.

Being that a majority of homeowners get government backing/support to afford their mortgage, its going to get more expensive to borrow, and utimatly result in a decrease in home ownership. Not that this is bad, I think that the US has more people owning homes than is economically sustainable. But the transition away from government support of home ownership is going to cause negative effects across the entire housing market.

Edited February 13, 2011 by Dan + Gemvita