Government Support of Housing Won’t End Soon
Scott Garrett, who is the incoming Chairman of the House Financial Services Committee, told the Wall Street Journal on Wednesday that federal support for the US housing market should be withdrawn gradually, and the process should not be rushed.
Garrett, who would be in charge of mortgage giants Fannie Mae and Freddie Mac, told the Journal that he has not “established a specific time frame for winding them down.”
“You have to recognize what the impact would be on the fragile housing market as it stands right now,” Garrett added.
The two mortgage companies now overseen by federal officials have been blamed by a number of Republicans for starting the trend of irresponsible lending which led to the historic boom and bust of the US housing market and have argued for housing finance reforms to be included in the financial rules rewrite. A number of those Republicans now concede, however, that a speedy withdrawal from support of Freddie and Fannie may not be practical, given the dominant position the two companies have in the nation’s housing market.
Together with the Federal Housing Administration and Department of veterans Affairs, Fannie and Freddie have guaranteed close to 90 percent of all loans originated in 2010’s first three quarters, according to data published by Inside Mortgage Finance.