[quote=HereWeGo]If FNM and FRE are bailed out, what happens to lending standards? What will the govt demand in terms of down payment and interest rate?[/quote]
I just saw a story on them on Bloomberg. They were saying that Fannie Mae owns some $6 Trillion in Mortgages.
They are beyond bailout.
If the government wanted to get into the mortgage business they could create a tax free mortgage where the investor who buys it doesn’t pay income tax on it while the homeowner can’t deduct it off their taxes. They could make it just for low income people who don’t get the benefit of the deduction anyway. Because the investor doesn’t pay income tax the interest rate would be about 75-80% of “market”.
Another way to finance mortgages would be if Congress would ever put the SS revenues into an actually trust and not spend it like we do now. We could take the SS money that is fed into the fund and use it to finance mortgages. At 4-5% that would be a decent return. These loans would only be available to lower income, middle class first time home buyers etc.
