Should the Federal Government Reduce Its Involvement in the Mortgage Market?

According to the Bipartisan Policy Center, which comprises former secretaries of the U.S. Department of Housing and Urban Development and former Senators, the federal government is extremely involved in the national housing market and they should take steps to reduce this engagement. The experts justify this opinion by saying that the government’s involvement with Fannie Mae and Freddie Mac increase taxpayer risk.

To help the government, the experts are planning to create a proposal which will provide steps for the government to ease out of the relationship. Even though some taxpayer risk will reduce, private firms could benefit from government subsidies. Apart from the federal government, the Federal Housing Finance Agency is also planning to amend its relationship with Fannie Mac and Freddie Mae; this involves trying to make lending more competitive and bringing in more private companies into the scene.

What is the drawback that the experts foresee in this situation? The extremely entangled relationship between the government and the agencies. Home buyers have been relying on the the Government-Sponsored Enterprises, Fannie Mae and and Freddie Mac. And this has lead the agencies to become an integral part of the nation’s political issues and weaning away will take a long time; many years if all goes well. All we can do if wait and see how things unfold as time passes by.