In February 2011, the Treasury department unveiled its plan to wind down GSE’s Fannie Mae and Freddie Mac. The Treasury also wants to see 10% down payments from potential borrowers.
This has sparked concern within the real estate industry and among those who recognize the importance of a healthy real estate market to the nation’s economic recovery.
Perception that these changes will take place overnight are unfounded.
Treasury Secretary Geithner has predicted a 5 to 7 year timeline for implementation.
Federal Reserve Chairman Lacker has declared that any near-term moves could be too destructive to the housing sector.
On February 9th, 2011 the House Financial Services Subcommittee held a hearing on GSE’s.
Meanwhile, on another front, Republican legislators have released 8 bills intended to accelerate the process of winding down Fannie Mae and Freddie Mac and increase oversight, promising more to follow.
These include H.R.1859, which would schedule a reduction of portfolio retained from over 700 billion currently to 250 billion in 5 years, and require a 20% down payment 1st mortgage (allowing a 10% seller-carry-back second). The bill calls for the eventual complete replacement of Fannie Mae and Freddie Mac with ”housing financing guaranty associations”. Another bill aims to end all affordable housing goals set by Fannie Mae and Freddie Mac. A hearing was held in the Financial Services Subcommittee on May 25th. The Subcommittee is likely to hold a markup of the bills sometime in June (except H.R. 1859, for which no promise to hold a future hearing or markup was made).
No comments:
Post a Comment