Realty Check

Fannie And Freddie: Helping Them Doesn't Really "Help" Us

So instead of holding reform over their heads, the government finally let up and gave Fannie and Freddiea break on their capital requirements--which were above the norm as a punishment for previous accounting “issues.” Ta-da! $200 billion comes flowing back into the mortgage market and everyone says, “fabu” because that’s going to help folks get new loans, refi out of bad loans and lower costs across the board.

But it also sends a signal. The federal government, which had been holding tight to its call for GSE reform and stricter regulation of F and F before they let loose their grip, decided to let go. So what’s next? Some say it’s really and truly bailout time.

The move today will help the mortgage purchasing market going forward, but it doesn’t do a whole lot to fix the mistakes of the past that are still plaguing the market, as ill-fated adjustable rate mortgages continue to reset across the American landscape.

That means that when Congress returns and the Chairmen of the House Financial Services Committee and the Senate Banking Committee set a fire under their bailout plans, the likelihood of them flying through the system increases.

I’m not going to get on my bailout bandwagon of fury again. You've all heard me rant about how unfair it is for you and I to pay for a mortgage market that created a faulty product and a borrowing public that couldn’t see through their granite countered-greed.

But I am going to say this: bailing out the markets negates a painful but necessary correction in home prices. Affordability is completely out of whack and I say shame on anyone who tries to prop up prices instead of letting those to blame for it all hang on the hook.

Fannie & Freddie Freed Up

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