With millions of suddenly unemployed homeowners expected to seek relief on their mortgage payments, a libertarian regulator is standing in the way of the federal government using its most powerful weapon to stave off a housing crisis.
One industry projection estimates that servicers will be on the hook for $100 billion in payments — a scenario that would wipe out many of the companies and destabilize the housing finance system. Now critics are accusing him of clinging to a long-held goal that makes little sense in the face of a potentially major housing crisis sparked by the pandemic.
If mortgage companies themselves go under, Fannie and Freddie could end up taking huge losses, so keeping them out of the game to preserve their capital makes little sense, especially when they have a credit line to Treasury. “I don’t get it,” Zandi said. “Any forecast here is possible, but it feels increasingly unlikely in the context of what will be 15-20 percent unemployment, and the longer he waits to guard against the downside, the costlier it’s going to be for [Fannie and Freddie], the mortgage servicers and ultimately the consumer.”The FHFA said it is on top of the situation.
Yes to this. Americans get approved for mortgages way more than they should be approved for. High Risks have bee accepted as norms because the claim they can make “payment”.
neal_katyal why doesn't he start by resigning
Fannie & Freddie - the culprits of the 2008/098 meltdown
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