U.S. taxpayers were reminded on Tuesday that our long national Fannie Mae and Freddie Mac nightmare is far from over.
During the 2008 financial crisis, President Bush and the Democratic congress approved the formation of the FHFA or Federal Housing Finance Agency. The organization would manage the GSE’s Fannie and Freddie.
The head of the organization Edward Demarco issued Congress a note Tuesday on how to fix their ailing investment. The plan calls for building a secondary mortgage marketplace infrastructure with the goal of getting more private involvement in the industry, to slowly contract the GSE presence in the market and help prevent foreclosures and maintain credit availability for new mortgages.
The total Treasury bailout of Fannie Mae stands now at $180 billion, with only $14.7 billion being returned in the form of dividends. This is more than twice as much as the bailout for the automakers (which totaled some $60 billion) and is by far the largest outstanding bailout debt still owed to taxpayers. Together, the two mortgage giants owe more to taxpayers from their bailout than all other industries combined, and the bill is still growing.
This is a problem that can’t be ignored. Fannie and Freddie continue to dominate household mortgage holdings in the U.S., with over 90 percent of all U.S. mortgages owned or guaranteed by them. Together they control nearly 31 millions home loans with a total value in excess of $5 trillion.
-Bryan Kloster
-Bryan Kloster
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