Sunday, September 2, 2007

Fannie and Freddie: Can they come to the rescue?

It's been nearly 70 years since Fannie Mae — the Federal National Mortgage Association — was formed to expand home ownership. Many observers of today's sub-prime mortgage debacle are arguing for Congress to let Fannie Mae and its twin, Freddie Mac (the Federal Home Loan and Mortgage Corp.), use their institutional power to stabilize markets by buying up more mortgage debt.

But the changes being proposed avoid reckoning with more basic questions: Should Fannie and Freddie compete with private lenders or return to their original mandate of helping borrowers get credit they couldn't otherwise get?

As unprecedented increases in delinquencies and foreclosures have sent panicked bond-holders looking for the exits, the relative stability of Freddie and Fannie is looking more attractive. The two firms are promising to help provide financing for homeowners in financial difficulties.

read more | digg story

No comments:

Post a Comment