The End of Fannie Mae and Freddie Mac?Feb 24 2012
It's been announced that the Obama administration plans to shrink Fannie Mae and Freddie Mac gradually and reduce the government's role in the mortgage market, which has expanded dramatically since the financial crisis.
Fannie and Freddie almost single-handedly keep the housing finance market afloat, especially in recent years. Together, they both guarantee about $100 billion in mortgages per month. By eliminating the two housing-finance giants, a new market for the private sector would be created for mortgage-backed securities.
However, there have been no exact plans on how this gradual reduction will take place since they don't want to do anything suddenly that could possibly damage the market. More details are anticipated to be released this spring.
What do you think about this move? Do you think less government involvement in mortgage is a good or bad thing? Let us know!