The White House recently released recommendations to phase out Fannie Mae and Freddie Mac. C.A.R. says the elimination of government involvement would raise borrowing costs for home buyers and severely restrict a safe and affordable flow of financing, further impeding the still-fragile housing market recovery.
C.A.R., along with NAR, believes that Fannie Mae and Freddie Mac government-sponsored enterprises (GSEs) should be converted into government-chartered, non-profit corporations. Such an entity would ensure government’s role in a stable real estate finance system, while eliminating the conflict created by the GSE’s current charter allowing for a private profit and public loss structure. With a clear explicit guarantee by the government, these entities would continue to be able to offer low interest rate loans onto home buyers and assure investor confidence.
The White House’s proposal also recommends allowing the maximum loan limit to drop back to $625,500 in high cost areas, further hampering California’s housing recovery. Analysis by C.A.R. shows that a reduction in the conforming loan limit to $625,500 would render a percentage of home sales ineligible. To see the analysis, and C.A.R.’s recommendations on the GSE reform and loan limits, visit http://www.car.org/newsstand/newsreleases/gsefuture/
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