A prominent Republican says the federal government should continue to play a role in the mortgage industry.
This Republican leader wants to dramatically scale back the government’s role and to wind down Fannie Mae and Freddie Mac.
Just as they did with Libya, the Obama administration is once again leading from behind. They’ve offered some vague guidelines about what to do with Fannie and Freddie but they’re letting Congress do the heavy lifting.
Home prices are still falling so politicians fear exacerbating that and increasing the number of foreclosures with a rapid removal of government subsidies for mortgages.
Reuters reports: Democrats and Republicans alike agree the U.S. system of housing finance needs to be revamped. They disagree on the extent to which government support should be maintained.
Currently, through Fannie Mae, Freddie Mac and the Federal Housing Administration, the government backs about 90 percent of all new mortgages. The level of future government support will be determined by legislative changes that could take years to enact.