Top Senate lawmakers got down to business today over how to wind down government-sponsored mortgage enterprises Fannie Mae and Freddie Mac, Reuters reported. While both Democrats and Republicans agree that the government needs to get out of the mortgage business, they differ over whether it should maintain a role in subsidizing housing financing.
“I am concerned about the unintended consequences for our housing market and economy that could result if a government role is eliminated completely,” said Tim Johnson, the Senate Banking Committee chairman and a South Dakota Democrat, commenting that record low mortgage rates, which currently hover around 4 percent, would likely skyrocket if the government pulled out suddenly.
At the moment, mortgage rates are continuing to sink to new depths, seemingly shattering previous lows every week. In the week ending Sept. 8, the 30-year and 15-year fixed-rate mortgages were at all-time lows, according to the Primary Mortgage Market Survey released today by Freddie Mac.
Still, Fannie and Freddie continue to hemorrhage tax-payer dollars. The firms have already used up $170 billion since they were placed under government control in 2008, Reuters said.
“We need a private system to enable institutional investors,” Peter Wallison, a fellow with the conservative American Enterprise Institute, advised the committee. “We are forcing the taxpayers to take the risk the government is taking.” [Reuters]