MortgageOrb, Sept. 5, 2012
Rep. Paul Ryan, R-Wis., the Republican vice presidential nominee, wants to do away with Fannie Mae and Freddie Mac and privatize the secondary mortgage market. But while there may be a lot of sympathy for that idea, given the amount of money the government-sponsored enterprises (GSEs) have cost taxpayers, it may not be that easy to accomplish. …
“The problem is you can’t eliminate Fannie and Freddie immediately without a private market to take their place, and right now there is virtually no private market,” says Peter J. Wallison, a fellow at the American Enterprise Institute, who created a plan similar to Ryan’s back in 2011. “The first part is a very difficult problem politically, and the second part is a problem economically and financially. You have to reduce Fannie and Freddie’s share and have the private market simultaneously take their place.”
Is Wallison’s idea feasible? Scott Stucky, chief operating officer of DocuTech Corp. in Idaho Falls, Idaho, believes that it is.
“Fannie and Freddie were privately funded for 40 years,” says Stucky. “The key to fix all this is to get private money back into the market. But for that to happen we must have consistency and an end to uncertainty for originators. They don’t know what the rules are going to be, so they are not doing all they can do to approve people.”
Check out the Sept. 5 e-Feature at MortgageOrb for a more detailed look at the options facing Fannie and Freddie over the next few years. http://www.mortgageorb.com/e107_plugins/content/content.php?content.12317.