Congress must protect Fannie and Freddie
That's why it is doubly imperative that Congress does everything in its power to preserve the strength of the nation's secondary mortgage market system as it puts the finishing touches on much-needed reform legislation.
There's no doubt in anyone's mind that Fannie Mae and Freddie Mac, the two multibillion-dollar secondary market leaders, need serious reforming if they're to continue to provide the fresh flow of capital that makes American homeownership the envy of the world.
Hopefully, House-Senate conferees will hew to Aristotle's advice moderation in all things when they meet to forge a compromise between the House and Senate versions later this fall.
Both the House and Senate bills provide for tighter, more consistent regulatory oversight over Fannie and Freddie. Stricter controls are vital to ensuring that these government-sponsored enterprises adhere to proper accounting procedures and avoid a repeat of the accounting irregularities of recent years.
That's exactly what's called for in these times, especially with millions of African-Americans, Hispanics and new immigrants lining up to buy their very first homes.
Mandates that force Fannie and Freddie to sell off some 80 percent of their mortgage portfolios could prevent the two government-sponsored enterprises from achieving their mission of pumping a steady flow of home mortgage money back to banks and other lenders. Secondary market reform is not best served by mandates but by a strong, independent regulator empowered to act.
Fannie and Freddie are not rigid bureaucratic agencies. They are free-market facilitators that enhance the housing market by providing billions of new dollars that allow lenders to provide low-cost, long-term mortgages to new homebuyers. As such, they are major stokers for a full-throttle national economy.
As they approach their 40th birthdays, Fannie and Freddie's work in aiding those pursuing the ultimate American dream of homeownership has been nothing short of spectacular.
Today, some 70 percent of Americans now live in their own homes a record that most nations would be deliriously happy to match even by the end of this century. This rising tide of homeownership has swept across all income levels benefiting poorer Americans and minorities. In fact, more Hispanics and African-Americans own their homes than ever before, and their rate of ownership is increasing faster than that of the general population.
Sadly, housing prices have risen so fast in some particularly robust urban markets that millions of middle-income people again are being priced out of the market.
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