Date: 25 Feb 2012 0 Comment Posted by: Kristin Cummins
[Warning: I am not an expert on the maters that are going to arise in this post, thus it will be light on personal opinion]
You can’t miss the news surrounding Fannie Mae and Freddie Mac lately. Every day this week the two government backed agencies made headlines in the Washington Post, and did so nearly as much in The Wall Street Journal and the New York Times as well. The topics of that coverage were many, everything from conflict of interest, to government waste, to the future of the organizations. Today I only want to touch on the last one; the simultaneous efforts to leverage Fannie Mae and Freddie Mac to keep the housing market afloat, and to wind down the organizations completely in favor of a new government solution or to be replaced organically by the private market.
There is an obvious dilemma here, and it’s not one that is going to be easy to navigate. There are still far more questions than answers. Or should I say, there are far too many answers to each question?
Should we keep Fannie and Freddie?
what role would they play long term?
how do we scale back after the epic involvement in the housing market they are currently undertaking?
who will oversee them?
how do we prevent them from fanning the flame of another similar crisis to the one we are overcoming now?
Should we dissolve Fannie and Freddie?
who will pick up the slack?
will mortgages become prohibitively expensive?
what will happen to current home values?
won’t this, in itself, create another housing crisis?
when do we do it? Currently they ARE the solution for keeping the mortgage market alive.
Here is my solitary opinion on the matter, and the primary point for writing this brief post: Don’t expect that anything definitive will happen anytime soon. It is far too complicated, and there is far too much at stake, both economically and politically. Neither political party wants to have the next housing crisis pinned to their back, so both parties will tread carefully, and both will look to position themselves so the other can be blamed for any negative outcome, while also trying to be able to take the credit for a positive one.
Interested in seeing the news I’m referring to above? Here is a link to the Washington Post articles related to the topic.
Kristin, the founder of The Ramsbury Group, has been representing clients and redeveloping properties in the Washington DC area for over a decade. She has represented residential and commercial clients in transactions ranging from $200,000 to $4 million in value as well as commercial leases up to 15,000sf.