The new design of Fannie and Freddie, when or if that happens, may require fees get charged for any federally backed loans – and it’s about time…The trick will be to charge a fee sufficient to cover the Government losses and not perceived as charging too much. It was interesting to note that until recently, FHA had turned a profit.
Some suggest private lenders form a cooperative of sorts and pay fees into a “mutualized loss pool” to provide guarantees for mortgages. In addition, pay a “reinsurance” fee to the Government as additional insurance for additional losses.
It is interesting to note that almost $10 Trillion of mortgages have been created over the past 30 years which seems to have outpaced the “capacity” of the nation’s banking system.
Source: WSJ, 8-24-2010 page A6.
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