Most people recognize the GSEs should be eliminated because their implied government backing is now explicit. These entities are not private entities, although many private investors would like them to be so they could profit off the government guarantee.
Whenever people start discussing how to reform or terminate the GSEs, invariably someone will try to scare everyone by claiming US housing finance will cease to function, the housing market will crash, or some other nonsensical doomsday scenario will come to pass.
I suspect the current round of fear mongering over GSE reform comes from GSE investors who want these entities preserved and turned over to private enterprise. For whatever the reason, this time around, the scare tactic is the elimination of the 30-year mortgage — a loan product that existed before the GSEs and will continue long after they’re gone.
30-year fixed-rate mortgage
The 30-year fixed-rate mortgage has been popular among progressives and conservatives alike because it is a good loan product. The reason the political left likes the 30-year loan is because it provides a means for average wage earners to acquire wealth.
via Would eliminating the GSEs doom the 30-year mortgage? – OC Housing News.
