In response to the White House’s recommendations today to phase out Fannie Mae and Freddie Mac, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said the elimination of government involvement would raise borrowing costs for home buyers and severely restrict a safe and affordable flow of financing, further impeding the still-fragile housing market recovery.
“A reduced government presence in the mortgage market will raise the cost of homeownership and make mortgages less available,” said C.A.R. President Beth L. Peerce. “Moreover, Congress needs to understand that during economic downturns, the housing market needs government involvement to ensure capital stability. History has shown the private market is incapable and unwilling to step in during the hardest of times and meet the demands of the nation’s home buyers.”
C.A.R., along with the NATIONAL ASSOCIATION OF REALTORS®, believes that Fannie Mae and Freddie Mac government-sponsored enterprises (GSEs) should be converted into government-chartered, non-profit corporations. Such an entity would ensure government’s role in a stable real estate finance system, while eliminating the conflict created by the GSE’s current charter allowing for a private profit and public loss structure. With a clear explicit guarantee by the government, these entities would continue to be able to offer low interest rate loans onto home buyers and assure investor confidence.
CLICK HERE to read the entire article online at the C.A.R. website.