Can they close down Fannie Mae ?
A joshbl 74 : Well thought out but not sure I agree with all of it . First off it eliminates liars loans . Secondly , the banks own huge inventories that cost them real dollars in upkeep . I would think they would get back to business as an old savings and loan did and find local buyers .. They can claim all they want to and proof is in your refinance alone . They don't even have much of the needed paperwork for the millions of foreclosures . And are now being sued for it . They have been caught red handed MANUFACTURING said paperwork ... We bailed out THEIR losses and outright fraud in the housing bubble . The time for guarantee is over . Let them pull their shenanigans on each other , not us .
- joshbl74Lv 510 years agoFavorite Answer
It would be very difficult. Fannie Mae owns trillions of dollars in mortgages. To close it down you'd have to:
first- stop buying new mortgages which would constrain lending by banks causing a sharp drop in house values as it became even harder to get a mortgage. The banks would have to carry the mortgages on their books rather than selling them to Fannie. They'd want the loans to be "guarantied" so they would tighten lending restrictions to ensure their investments.
Second- sell off the existing stock of mortgages held by fannie. That's trillions of dollars no one has. Who would by all these bad investments. Some banks might be willing to buy some of the very good loans but it not that much.
I'm going through a re-fi now and the bank is making it insane. They want documents we never had and receipt proof of every thing in our tax filling. It's worse than an IRS audit. I think they are trying to re-certify the validity of the loans in the fannie portfolio by shoring up the docs in every loan but the requirements far exceed any thing I've ever seen before. Doing this process for every home loan in america would take an eternity.
The other option is to stop buying new mortgages and let the others time out over the next thirty years.
EDIT: I actually do believe that Fannie should be shut down. Your question was, can they do it. It would be very difficult. The law suits over foreclosures have less to do with improper foreclosures and more to do with cash strapped states looking to collect billions in fines for technicalities. Yes I know you can find individual examples of people being wrongfully foreclosed but the VAST majority of those in foreclosure are truely in default. I'm not trying to defend them but simply saying not to get sidetracked by this foreclosure lawsuit business. The liars loans as you rightly call them are a big issue on both the consumer and the banking side. There is a huge sum of money out there in the form of home loans that have little to no chance of being repaid. The US tax payer will eat that loss and we should have never been in the business to begin with. We need to get out despite the monumental difficulty of doing so.
- DiLv 710 years ago
They should because it requires regular bailouts.
Of course, they aren't capable of doing the right thing, so will choose not to.
- 10 years ago
I sure hope so...huge racket and waste of tax payer money
- Anonymous10 years ago
Yes, and in many ways.
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- Anonymous10 years ago