Hey, this may be a mute point since (a) Senator Bob Corker’s proposed Senate bill winds down Fannie and Freddie in 5 years is gaining steam and (b) Fannie & Freddie are winding down toward $250B in loans…Source: http://www.mortgagenewsdaily.com/08172012_gse_conservatorship.asp
About 90% of today’s $14 Trillion in mortgage loans are controlled by the Federal Housing Authority (FHA), Department of Veterans Affairs, Fannie Mae or Freddie Mac. That’s alot of risk concentrated on one source – the US taxpayers!
Note: I saw another article stating there’s about $23 Trillion in total US residential real estate market values. Source: http://paperboat.studiopod.com/2012/06/12/the-derivatives-time-bomb/
Even though the private market couldn’t compete with government guarantees, or offer loans without a prepayment penalty, we certainly don’t want to leave the taxpayer on the hook.
One step toward privatization suggested was to reduce the maximum amount of mortgage loan by $75,000 on a periodic basis which eventually would force more people out of the government loan and into a private loan.
Full disclosures – consumer protections – and reducing taxpayer exposure are goals.
Recourse -The right to seize the home owner’s other personal assets, in addition to the real property, in payment of the loan. Proposals include using recourse to drive rates lower if borrower is willing to accept more risk to give up their personal assets
Note: Government National Mortgage Association – Ginnie Mae – securitizes the FHA loans now.
Source: For some information was WSJ 10-25-2010, A17
Also, if you want to watch a good summary of securitization analysis – here’s a Cspan video library segment – but grab a pot of coffee – http://www.c-spanvideo.org/program/296226-1
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