Op-eds and Articles

Why Fannie and Freddie Aren’t Going Away Anytime Soon

By / 2.6.2013

Writing for US News & World Report, Jason Gold argues that despite conservatives and progressives’ demand for a reform of Fannie Mae and Freddie Mac, the two GSEs are going to stay as they are for some time.

Fannie Mae and Freddie Mac, the two formerly private mortgage giants, have been in limbo since 2008 when the federal government took them into conservatorship.

Since then, Congress and President Barack Obama have proposed sweeping reforms of Fannie and Freddie—conservatives demand the government-sponsored enterprises (GSEs) be privatized if not abolished altogether, while progressives favor a more gradual phasing out of the two mortgage giants, which have become critical to the housing market recovery during the past several years.

There seems to be no hurry among policymakers to decide the fate of Fannie and Freddie, but it looks increasingly as if the GSEs are here to stay. Fresh evidence of this came last month, when the Consumer Financial Protection Bureau (CFPB) endorsed guidelines Fannie and Freddie now use in making new mortgage loans. The details are complicated, but in essence the bureau’s much anticipated qualified mortgage rule exempts Fannie and Freddie from the strict guidelines private bankers must now follow to ensure that borrowers can repay their loans.

This could mark a turning point in the GSEs’ fortunes.

Read the piece at US News & World Report.