According to members of a panel at the National Association of Realtors (NAR) 2011 Midyear Legislative Meetings and Trade Expo, the housing market and the economy need a reliable housing finance market in order to recover and the federal government will need to play a role in the secondary mortgage market in order to make that happen. Without a viable replacement for the GSEs, explained Steve Brown, 2011 NAR first vice president nominee, eliminating Fannie Mae and Freddie Mac “will severely restrict mortgage capital and result in higher fees and costs for qualified buyers.” Brown believes that “reform of the secondary mortgage market needs to be comprehensive and undertaken methodically.”
While other panelists noted that they believed government involvement in the finance market is unhealthy, none believed that Fannie or Freddie should be eliminated in the near future. Several proposed that private capital be encouraged to return to the housing finance market, but none believed it could be done on a grand scale or in the near future, as proponents of proposals to eliminate the GSEs have suggested. David Katkov, executive vice president and chief business officer at the PMI Group, called the concept of transitioning to a purely private market “naïve,” adding that “the U.S.’s housing finance system dwarfs that of other countries and is far more complex” in order to support his view that while private finance works elsewhere, it will not work for the U.S.
Do you agree that the federal government cannot make a viable exit from housing finance in the United States?
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