Real estate statistics firm Altos Research
suggests the United States government may lean toward gaining complete control of government-sponsored enterprises Fannie Mae
and Freddie Mac
Language in the Dodd-Frank Act states that the hybrid public-private status of the GSEs is untenable and must be resolved. Further, it states that the final solution cannot compromise the ability of Americans to have access to affordable mortgages.
In a webinar hosted Thursday by Altos, Vice President Scott Sambucci said that the government may be opposed to efforts to privatize Fannie and Freddie. However he added, "we're not in the rooms where these decisions are made and we don't know what will happen."
Such news would be accepted well from bond investors who seek an implicit guarantee on mortgage-backed securities, but Sambucci warned such a move could ultimately be bad for the nation's housing market.
Considering the popularity of 3.5% down payments, borrowers that offer such a small equity stake are more likely to get underwater in environments of price volatility.
In which case, "the government may continue to pump money into the market," Sambucci said.
The conservatorship of Fannie Mae and Freddie Mac exposed taxpayers to upward of $5.3 trillion worth of risk, according to the Dodd-Frank Act.
Write to Jacob Gaffney