WASHINGTON (Reuters) – The U.S. housing industry has waited three months to find out how Mel Watt will govern taxpayer-owned mortgage companies Fannie Mae and Freddie Mac , and has been frustrated by his silence.
Fannie Mae and Freddie Mac, once the twin kingpins of the home loan market, have been languishing in Federal conservatorship since September 6, 2008. While their continued presence is an embarrassment to many on both sides of the political aisle, it is generally understood that the agencies can’t be axed without seriously disrupting the market, and that a phase-out should occur over a period of years — to coincide with a phase-in of the institutions that will replace them. The problem has been the absence of a coherent game plan for developing those institutions.
“A strong point of support for the GSEs and the mortgage markets, Fannie and Freddie are the only entities in the country willing to purchase 20 and 30 year fixed rate mortgages, their elimination would have meaningful impacts on the mortgage markets. The monthly cost of owning a home would rise and the size of the market itself would shrink.”
Fannie Mae and Freddie Mac collected $7.9 billion from large financial institutions to settle suits over bad mortgage-backed securities purchased by the seized housing finance giants during the subprime housing boom, their federal regulator said.
via LA Times – Latest News – Fannie Mae, Freddie Mac got $7.9 billion in bank settlements in 2013.