NAR Tells Congress: Turn Fannie and Freddie into Non-Profits

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Today, the National Association of Realtors (NAR) is recommending to Congress that the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac be converted into non-profit secondary market authorities.

NAR thinks that the current private profit and public loss structure should be removed while Congress and regulators consider restructuring the GSEs.

NAR noted that Fannie and Freddie are “best positioned” to become government authorities, therefore, they should provide a flow of capital into the secondary market regardless of how volatile the mortgage market is.

However, according to the proposal, they would not be federal agencies. Instead, the authorities would function as “self-sustaining” organizations removed of Congressional funds and profit motives.

Nevertheless, NAR called for the government to guarantee businesses of the authorities through the use of mortgage insurance on products with a loan-to-value (LTV) ratio of 80% or higher and mortgage-backed securities (MBS) fees.

According to the proposal:
“NAR believes that any organization with a private profit and public loss structure, as the GSEs are presently structured, is inherently flawed.”

All surplus revenue should be reinvested to accumulate capital in strong markets in order to spark rebounds in weaker markets. NAR also proposed a guarantee from the Federal Deposit Insurance Corp. to attract private market participation.

This article is brought to you by Housing Wire.