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- Lawrence Yun, chief economist at the National Association of Realtors has stated: “Let’s have a government role, right at the front…”
- “It’s just ingrained in the American mindset that to say, ‘I own a property. I own piece of America,’ ” says Yun, explaining why housing is special
- The worry is that if the government pulls out of housing too far, loans will be harder to get and interest rates will go up
- Without a government guarantee, all those pension funds and foreign governments will be reluctant to lend Americans money to buy their houses
- Scott Simon, head of the mortgage division at the money management firm PIMCO, was quoted as saying that his company is “one of the largest holders in the world of agency mortgages,”
- If there is no government backing, investors like PIMCO won’t take the risk on mortgages
- The most likely solution is that private companies would shoulder most of the risk and take big losses in a crisis and the government will step in as a last resort
- There will be a re-creation of Fannie and Freddie, but the government and the housing industry will pretend that this is not the case
- Mortgage companies will start taking more risks and the housing industry will eventually recover and improve
- Can America avoid another housing bubble and resulting economic crisis?…..
For more: http://www.npr.org/blogs/money/2011/03/31/134863027/whats-next-life-after-fannie-and-freddie
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