After the country (and the world) witnessed the debacle of the government shutdown, most Americans are now convinced there isn’t a thing policymakers in Washington truly agree on. Only the threat of a global economic calamity in the form of a debt ceiling breach forced Congress to agree on reopening the federal government.
But while most issues facing the country have become decidedly red or blue, when it comes to getting private investors back into the mortgage market, and decreasing the reliance on government by resolving the fate of Fannie Mae and Freddie Mac (known as Government Sponsored Enterprises or GSEs), Washington, D.C. is downright purple.
Since the mortgage meltdown in 2008, however, private capital has been a very small part of the mortgage making process. The government currently backs more than 90 percent of all mortgages made. The slow trickle of private investors who have been coming back into the market is increasing, but they have so far only shown interest in the safest, most pristine borrowers.
But as investors increasingly develop an appetite for private mortgages, which is a good thing, the size of the pools of private loans (known as securitizations) seems to be shrinking.
Continue reading at U.S. News & World Report.
