Cutting the Federal Housing Administration’s mortgage insurance premiums and encouraging the FHFA to lower down-payment loans that would be purchased by Fannie Mae and Freddie Mac means two federal programs are competing with each other instead of bringing more private capital into the mortgage finance system.
While the acting director at FHFA, DeMarco was criticized for trying to reduce Fannie and Freddie’s presence in the mortgage market, praised by Republicans, but Democrats accused him of cutting credit availability. He says its past due time for taxpayers to get out from under the $4.5 trillion in mortgage debt, essentially backing 75 percent of mortgages.
Fannie and Freddie have about $240 billion in non-performing loans on the books and DeMarco supports the sale of them as well as the GSE’s recent credit risk transfers.
Meanwhile, he says, “Billions of dollars sit on the sideline…because the rules are uncertain, the government controls the field and the future legal structure is unknown.” ##
(Image credit: fotosearch–Question mark housing)
