The End of Fannie and Freddie?

[longknife]

If they're done away with, who is going to guarantee mortgages? I got this @ The End of Fannie and Freddie? » Coffee and Markets with a link to this important piece Senate panel approves bill to end Fannie Mae, Freddie Mac @ Senate panel approves bill to dismantle Fannie Mae, Freddie Mac - The Washington Post

After whole bunch of searching, this may be the act they're referring to – s. 1376 FHA Solvency Act of 2013. It can be found @ https://www.govtrack.us/congress/bills/113/s1376/text And, if one goes to this link @ https://www.govtrack.us/congress/bills/113/s1376 one can create an account and govtrack.us will track it for you.

 

[priceless]

If they're done away with, who is going to guarantee mortgages?

A couple things are happening now. One is that the triangle between renting, landlording, and lending is replacing the direct relationship between home-buying and lending. This basically prevents the lender from having to foreclose every time a tenant defaults on their payments.

Another is that more people are choosing to live in RVs, trailers, and other small, portable, and inexpensive dwellings. By doing this, these people will pay off their debts and save up money, which they will eventually probably invest in acquiring larger properties OR increasing their disposable income, which will generate more income for others who will spend it on acquiring larger properties.

Freddie/Fannie had good intentions when it was created but no one foresaw the unintended consequence that developers and the financial/insurance industries would exploit the loans by extending them to the maximum duration and the maximum payment borrowers could afford. What was supposed to democratize home ownership for the masses turned out to be a huge subsidized rental program for banks, developers, insurance companies, etc. to cash in on.

It's going to take a long time before these industries subside in their voracious appetites for revenue in that they grew so accustomed to huge volumes of money floating around the economy due to all the subsidized mortgages dumping the entire sum of a 30+ year mortgage into circulation with the assumption that widespread economic growth would prevent isolated foreclosures from undermining the economy as a whole.

Of course, what we've seen the economy grow into as a result of all those years of Freddie/Fannie stimulus is so accustomed to easy money that most of the pre-modern ethics of everyday conservation and efficiency have been lost and replaced with practically invisible forms of waste that are nearly impossible to correct because they are so taken for granted and nearly invisible due to their normalcy.