subject: Treasury might Kill Fannie and Freddie Without Congress [print this page] Treasury might Kill Fannie and Freddie Without Congress
The white house and the Obama administration is trying t o heavily reduce the government's role in financing homes. This proposal would probably have a negative impact. It is aimed toward more and more Americans buying homes but it would make homes more expensive. They department of treasury had a plan to slowly dissolve the big companies like Freddie Mac and Fannie Mae. These are the companies that are government sponsored that are meant to help more and more Americans to buy homes even during the market crisis.
The congress still needs to decide how much they want to reduce the government's role in mortgages. The three options presented would probably create a housing finance system that relies for private money. If we get rid of these two top companies, it would totally transform who would have houses and who wouldn't be able to afford them anymore.
The Treasury secretary, Timothy Giethner, say shat this change isn't scheduled to happen for another 5 years and it would probably proceed carefully. Every since the housing market went downwards, the government has been much pressured to get rid of these government companies.
Fannie Mae and Freddie Mac are responsible for holding more than half of the entire mortgages in the United States. Along with that, they are also part of giving 90% of the new mortgages in the past year. The idea behind these to agonies is to buy mortgages from other lenders and sell them with a guarantee that the investors will be paid even if the borrower isn't in a financial position to pay for them. The main idea here is to give people who can't afford homes, a cheap rate so they also get a house they want. With all the foreclosures piled up, they currently have $150 in debt and the number can easily go p to $259 billion.
There were three options that the congress came up with it.
First option: The government would get no role beyond helping poor and middle class borrowers through their hard times through the FHA ( The Federal Housing Administration) . The second option is just to quit these altogether. The third option would be the most complex. The third option would give the government that biggest role but have the smallest impact on the prices of mortgage.
These changes are still in the planning phase and we must wait to see what really happens. Let's wait and watch and see what happens to mortgage refinance bad credit
