The fate of mortgage giants Fannie Mae and Freddie Mac is and has been under much speculation as the Republican majority takes control of the U.S House.
The government-run bodies Fannie Mae and Freddie Mac were once government sponsored bodies until the year 2008 soon after the housing crisis almost banish them. These two companies assured about half of all loans in the country at the time the housing bubble burst, and as of the first quarter of last year, Fannie Mae and Freddie Mac (with the Federal Housing Administration and the Department of Veteran Affairs) have assured almost 90 percent of the country’s new loans.
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Though evidently a significant part of keeping the lending lines open now, tax payers have had to pay everything for the two companies’ bailout, amounting to about $134 billion to date, and there is a rumor about at least another $20 billion FM and FM are getting to keep things moving. By contrast, as Alan Zibel’s Wall Street Journal write-up said, the estimated total cost of freeing the rest of the financial industry is a mere $25 billion.
Supporters of on-going federal support for Freddie and Fannie say that the real estate market is going down without them at this point. To take away that support right now would be catastrophic.
Democrats in the main have supported an enlarged role for Fannie Mae and Freddie Mac to guarantee that people from lower classes have right to homeownership.
A number of Republicans think that relying heavily upon the two mortgage giants to rebuild the real estate market, is keeping private lenders from coming back in to the view, and demanding tax payers to pay the price. Many Republicans were eager to relieve the federal government of the two “money-sucking” giants, but since their turn for power, they have cooled down a little.
Seems like Fannie and Freddie will still be the scene stealers of the country’s housing market.
