“Treasury Fixing Mortgage-Finance System Juggles Limitless Bailout, Economy”
“The U.S. Treasury Department, hosting a summit tomorrow on how to repair the mortgage-finance system, may get a blunt message from stakeholders in an industry tied to 15 percent of the country’s economy: Don’t screw it up.
The system’s size and complexity mean that a wrong move by the Obama administration could restrict credit, drive down home prices, increase foreclosures and slow the economy, housing advocates and industry participants say. At the same time, some lawmakers say it’s time to close government-controlled loan guarantors and halt limitless bailouts.
“It’s like building an airplane while you’re still flying it,” said David Ledford, senior vice president of mortgage finance at the National Association of Home Builders in Washington. Housing investments and related services account for 15 percent of gross domestic product, according to the group, ranking the industry second to health care.
Central to the effort are Fannie Mae and Freddie Mac, the government-controlled companies that issued and guaranteed more than 71 percent of mortgage-backed bonds last year. Between those companies and Ginnie Mae, which guarantees loans insured by the Federal Housing Administration, the government backed nearly 97 percent of U.S. mortgages in 2009.” Read more.
“Treasury Fixing Mortgage-Finance System Juggles Limitless Bailout, Economy”
Lorraine Woellert
Bloomberg, August 16, 2010.
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