Friday, February 11, 2011

Privatizing mortgages

A recent report from the Obama administration calls for Fannie Mae and Freddie Mac to be phased out over the next several years. What this means is that more American mortgages will be in the hands of private mortgage companies and banks. To be fair, this could go either way in terms of helping the economy. The stability of Fannie and Freddie has been called into question, mostly due to their inability to cover the costs of defaulted mortgages, and their neccessity has been called into question.

I'm worried, though, that this new move will jeopardize more American mortgages by placing those mortgages in the hands of companies that are claiming to be hurting in our current economy. Once they have mortgage control, what are they going to claim is necessary in order to maintain market stability? The last time they got their way, we saw Congress bail out private industry with taxpayer dollars. So, will people not only be paying their mortgages to these companies, but see their taxes go to supporting them too? While they post record profits? And hold off on hiring more people to lower the unemployment rate?

It could go another way, though, right?

No comments: