GSEs Revamping Old Policies

gse government shut downFannie Mae and Freddie Mac are fighting back against the rising trend that’s been pushing them out of the housing industry. But far from admitting that they’re obsolete they’re trying to revamp their policies to keep themselves relevant.

The latest change comes in the form of an update to their life-of-loan representation and warranty framework. These changes are meant to make things more transparent for lenders about the risks of repurchasing mortgages.

They are again trying to walk the fine line between going back to their old ways of allowing unlimited credit to multiple layers of purchases while still trying to provide some security against a crash.

Personally I think it’s a waste of time for them to be trying this. The problem was how they were doing business and it lead to the whole mess (among other factors). They’re trying to keep going the same way without addressing the real issues. Let’s forget Fannie and Freddie and move towards a smarter lending and repurchasing system.

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