GSEs (Fannie/Freddie),FHA&HUD

Fannie & Freddie suggestions;

Posted on Friday, February 4, 2011

> Regarding Freddie & Fannie's mounting REO glut: "The critical issue here is that
> the MBS Servicers interests are, at times, not fully aligned with either the homeowner
> or government policy. This is because the servicers, who are mainly banks, do not
> have the credit risk associated with the loan since it has already been securitized
> and sold. The GSE's have the risk. Maybe the GSEs should take over the servicing
> function for loans that they wrap in their day-to-day G-Fee business. Since they
> own the credit risk, they will be fully interested in the lowest cost solution to
> delinquency."
> "Another pro-active (foreclosure aversion) idea for the agencies would be that prior
> to the home becoming REO the owner-occupied borrower, once seriously delinquent,
> could be offered the opportunity to rent the property at the current market rent.
> The government would legislate a program that would permit investors to take these
> loans off their balance sheet once the home is rented to the borrower thereby strengthening
> these financial institutions and freeing up their balance sheets so they can lend.
> As the renter successfully makes 24-36 payments on time, they qualify to purchase
> back the property at the then market value."
> Another, on the Realtor side, wrote, "One of the biggest points of Fannie & Freddie's
> REO congestion is the lack of brokers they're using. Their current system of using
> on a few listing agents is ridiculously inefficient. Of course every Realtor in
> the business wants to get in on this action, and there are some very qualified folks
> out there being left out of the game. Someone at Fannie & Freddie needs to recognize
> that they need more hands on deck to move these homes. Basically, they need to
> at least double the number of Realtors listing these properties if they want to
> make a dent."
> "If regulators do away with the Fannie and Freddie system and don't replace it with
> some form of implicit or an outright explicit government guarantee, the 'Law of
> Unintended Consequences' will strike. Ginnie Mae's will undoubtedly price way better
> than any private MBS and the government will be over-run with FHA mortgages. Leave
> it to politicians to screw it up again. I say again, because it was all this nonsense
> about lending to the "underserved", which is code for those that don't qualify using
> traditional credit risk principals, that was a primary reason for the problems in
> the agency portfolios today. It is an example of the 'medicine' being worse than
> the disease."chrisman

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