U.S. should release control of Fannie and Freddie
Two years after the collapse of the housing market caused the federal government to take control of major mortgage lenders Fannie Mae and Freddie Mac, some Wall Street professionals are calling for the government to let the companies compete again on the private market.
At a recent conference in Florida, many financial experts predicted the continued involvement of the government in the mortgage industry could cause problems.
However, participants also said the government needed to remain active in the foreseeable future as a sudden withdrawal could cause 30-year mortgage loans to disappear, The Washington Post reports. Most experts advocated for a methodical and responsible transition of federal control.
“If we are going to begin reducing the government’s role, that would be a game-changer and a big factor in getting the private markets back and going,” Martin Hughes, chief executive of real estate investment company Redwood Trust, told the Post.
Currently, the Obama administration is expected to reduce the maximum size of guaranteed loans to both companies in the coming years. In addition, the government is scheduled to unveil new plans to overhaul the mortgage system and help struggling homeowners avoid foreclosure as soon as this week.