How Fannie and Freddie Prop Up America's Favorite Mortgage | WSJ

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Fannie Mae and Freddie Mac back about half of new mortgages in the U.S. Now, talks are heating up about reshaping or shrinking the two companies, a move that could impact millions of Americans. Photo: Heather Seidel/The Wall Street Journal

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Historically mortgages when more expensive and hard to get drive down the selling price of houses.

TreasureHunter-hfff
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I am learning more from the comments than I am from the actual video

brad
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plot twist: fannie mae and feddy make housing more expensive by increasing demand for housing

Theaverageazn
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Get rid of Fannie and Freddie, let the housing market crash and whatever loss in government guarantees will be more than offset by the reduction in price. Housing is not affordable and has only gotten more expensive with government intervention like Fannie and Freddie.

Kneephry
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If I recall correctly, regulating the out of control mortgage lending in 2000-08 would have made housing more expensive as well. If the cost of avoiding another global recession is people finding it more difficult to buy their first home, then I think we should avoid the recession and downsize/privatize Fannie and Freddie.

eugenefdscodes
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I feel like they left out (or at least didn't emphasize) that Fannie Mae and Freddie Mac were private prior to 2008. Maybe it would have been too much to cover, but it also seems like they should have mentioned the repeal of Glass-Steagall when explaining how mortgages used to work. That repeal is what allowed for the financial crisis in 2008. Still, it's nice to see a video covering this topic!

MsGrd
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Are people already forgetting that treating mortgage securities as safe investments is what brought about the 2008 financial bubble in the first place?

TheGoldenFluzzleBuff
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housing would be more affordable if all these people didn't have their finger in the stew

healthcarematters
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In Canada, we don't have 30-year mortgages anymore. Also, the banks did a stress test a few years back, to see how many current mortgage holders would be able to afford their own mortgage had the rate gone up. 25 years is the maximum you're getting nowadays.

Y_Canada
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By making loan easily available for everyone they make home more out of reach for everyone. 😂

dunggg
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why is there a need to reshape? i dont really get any msg from this clip

ginyilee
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Fannie and Freddie don’t make home affordable. They shift costs from interest to asset price. Housing costs more to acquire because Fannie and Freddie keep interest rates down. No one is really better off.

kevinkent
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So the government own Fanny and Freddie in the name of keeping mortgages low. Let's take a look at the affordability of housing since they took over...

lakaikid
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Stop making false arguments. No one is for eliminating Fannie and Freddie in Congress. Maybe You could find 1 or 2 members, out 535. What the debate is about is wither they both can leave their conservatorship with the government after their bailout.
So what this video alluded to about some ideological differences (should the government be the business of helping home ownership or not, is beside the point).

HusseinDoha
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Had trouble following the logic of this person's explanation of the relationship between banks, Fannie and Freddie, and "Investors". I think following the money through a few examples would be helpful.

vecda
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The government should not insure banks. Banks should be held to standards of course and shouldn’t lend a dime to people with bad credit. A home is not a blessing if you are broke. People should learn that before ever trusting a bank. You should always use a fixed rate mortgage and put 20% down. If you can’t do that. You can’t afford it. Find out a may to make it work so one day you can afford it. Saving money now can help a lot in the future.

matt.
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3 months after closing with regions bank today I received a letter from Fannie may they purchased the loan..

ENTERTAINERyou
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My 2¢ is that 30 year loans are a blessing: smaller payments, more time to pay, you can refinance, you can add your credit card debt to the mortgage (which has a lower interest rate and is tax deductable) etc. In mexico, no bank lends you for a 30 year mortgage, the best you get is 20 years fixed rate. If you're working, government lends you to buy a house with low interest rate, but it's a small amount. Government involvement in this case, I think is good, as long as the mortgages are sound and meet some standards.

huaweiandroid
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it sounds like here the only issue is that the 30 year mortgage might go, but even then how hard would it be for a private company to do the exact same thing? also the idea about the first deposit rising exponentially could be saved with a "help to buy" scheme that is similar to the UK, where new homes receive initial down payments / deposits that are relatively tiny.

tou
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If they get rid of both fm's, then most houses would be rented. Would that not raise rental rates even more than the 60% they have already risen. Wouldn't that allow more money to the wealthy from the middle class further destabilizing our economy? And last, now is the American dream =40-50% of income going to rental and then what is left over to go into the economy? How will that affect car sales, education, entertainment, etc? If their is a way to get more money from the middle class they will find it and take it, no matter what it does to the economy. If people do not buy stuff, the economy will not make stuff and then where is Gdp and investment?

knh