How Fannie and Freddie Prop Up America's Favorite Mortgage | WSJ
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- Опубліковано 22 сер 2024
- Fannie Mae and Freddie Mac back about half of new mortgages in the U.S. Now, talks are heating up about reshaping or shrinking the two companies, a move that could impact millions of Americans. Photo: Heather Seidel/The Wall Street Journal
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#WSJ #mortgage
Historically mortgages when more expensive and hard to get drive down the selling price of houses.
Yep! This video feels like propoganda.
The recession wasn't caused by 30 year fixed rate
heard of a comma?
@@jakehiller1401 ??
@@user-fr4cg2xj2w Okay?
I am learning more from the comments than I am from the actual video
Cybernetic Tiger Same here
this video is so misleading. Many countries that don't have these kind of companies have much lower mortgage interest rates than US does.
plot twist: fannie mae and feddy make housing more expensive by increasing demand for housing
Exactly. Basic economics will show anytime the legislative body tries to control a free market, it has unintended consequences later. Let the market do its thing.
@Thomas Headley , you're missing the point
Yeah but that just means more people are buying the houses
@@swesleyc7 yeah same that's why we should get rid of antitrust laws because it's definitely hurts the economy
Get rid of Fannie and Freddie, let the housing market crash and whatever loss in government guarantees will be more than offset by the reduction in price. Housing is not affordable and has only gotten more expensive with government intervention like Fannie and Freddie.
Housing is affordable but the problem is you all think you should be able to buy a home while working at McC Donald’s
@@BigRed2 you're an arrogant fool. when i grew up, people used to have one employed head-of-houshold with 3 vehicles, a wife and 5 kids to support yet everyone got a nice summer and Christmas holiday and we always had clean shoes and food on the table to eat. today everybody in the home works full time or at least 2 part time jobs and shares ONE CAR yet no one gets to leave even for the weekend, and have you noticed all those HOMELESS PEOPLE who cannot afford RENT on today's wages because the landLORD must be able to pay for his luxury boat and fancy lifestyle?! But ya, it's all our fault for expecting a PAYCHECK to cover the HOUSING needs of ordinary folk from just one of those multiple jobs in the family. That's also being DESTROYED AS WE SPEAK - The Family.
beyondtheprogramming When did you grow up ? Maybe you where sheltered and only around certain people you fool
@@BigRed2 did you bother to read the article Gardner Gee posted above about housing prices skyrocketing over the last 50 years or are ya just winging it? "In 2016 alone, home prices rose twice as fast as inflation." Ya i kno its from CNBC but there are thousands of related housing articles from the last 10 years just like that one about the unaffordability of housing and wages if you bother to read them and learn. It doesnt matter so much WHERE or WHEN i grew up but suffice it to say that i come from a long line of wealthy Real Estate developers who have seen many boom and bust cycles from California/Nevada/Arizona markets so i do have an idea of what i speak. When i was in grade school, my cousin worked as a checker at Lucky's and she paid all the bills and put her husband through MEDICAL SCHOOL. I'd like to see anyone do that today!
beyondtheprogramming Housing is an investment and should rise faster then inflation and inflation has been low for past decade, why won’t you tell me what time period you grew up? Don’t want me sending you links refuting your claims lol
If I recall correctly, regulating the out of control mortgage lending in 2000-08 would have made housing more expensive as well. If the cost of avoiding another global recession is people finding it more difficult to buy their first home, then I think we should avoid the recession and downsize/privatize Fannie and Freddie.
@Sheldon Cooper
Bingo! I'm only 36, but I'm already betting against Fannie and Freddie for this reason. I was in stocks in 2017. I was in bonds in 2018. I just switched out to fixed income, which is mostly Fannie and Freddie 30-year bonds. Once that bubble finds its top, I'll move on the next one. The goal of making housing cheaper has only created an arbitrage opportunity for the wealthy.
I came here after watching 99 Homes.
@@yamahantx7005 i hope you made a buck after today’s drop
Here we are😂
I feel like they left out (or at least didn't emphasize) that Fannie Mae and Freddie Mac were private prior to 2008. Maybe it would have been too much to cover, but it also seems like they should have mentioned the repeal of Glass-Steagall when explaining how mortgages used to work. That repeal is what allowed for the financial crisis in 2008. Still, it's nice to see a video covering this topic!
so why reshape??? current system look just as great isn`t it?
@@ginyilee7886 Honestly, I think the people/public can have a lot of power in either scenario (as far as making Fannie Mae and Freddie Mac private or public). It just comes down to making educated decisions. That's the real problem. It's hard to play the game when you don't know the rules. But, since you asked, my two cents is that you're chossing between which generation you want to protect. Keeping them under government control keeps the value (somewhat artifically) high, fo now. That's important because so many people don't have retirement savings. The vast majority of people look at their house as their retirement. If you privatize them, there's a chance the mortgage rates will go high and the home prices will go low, and that will favor the younger generation who currently find it hard to buy a house. I'm in that generation, and my feeling is that I want to protect my parent's generation. I'm young, I can work hard, I believe in my generation even if the news outlets don't. I think we've got this and maybe the most "woke" thing we can do is be the generation that stops asking the government to hurt one group for our sake and instead looks to build ourselves up and bring other groups up with us. ... Sorry for the diatribe. :)
MsGr8d I like this comment!
Thanks for mentioning this Glass-Steagall. Did more research on the topic and am so glad to have learned this.
Are people already forgetting that treating mortgage securities as safe investments is what brought about the 2008 financial bubble in the first place?
Of course they forgot. History always repeats itself.
Mortgage investments are safe. It was the inclusion of subprime loans in collateralized debt obligations that made them risky.
Jason Wilkins and why were subprime mortgages accepted? Because banks had no stake in them because they were sold off as securities. Why were the securities accepted? Because they figured the number of sub primes that would default would be insignificant compared to the relative gains. What does government guarantees of mortgage securities imply? 0 risk factor and an incentive to give out mortgages that wouldn’t normally be accepted? When does the system work? Always until it doesn’t and you get a massive, globe spanning recession that we’ve barely recovered from a decade later
Yeah you pretty much got it right, everything got out of hand however I’d say we recovered dramatically, not barely
@@TheGoldenFluzzleBuff it was a series of the perverse incentives. Part of why the banks did is because the credit rating agencies knew that they had to give good ratings otherwise they will lose business. The banks wouldn't have given that money if they didn't think they could repackage them as securities and those are surance is came by way of the credit rating agencies. That being said, mortgage Investments are still generally safe. The trouble is when they are packaged with subprime mortgages. Perhaps I'm being naive but my understanding is that mortgage eligibility is tightened but I'm still hearing Rumblings of things like ninja loans returning
housing would be more affordable if all these people didn't have their finger in the stew
How? You make no sense
@@BigRed2 he means that it would be more affordable if the government got their hands out of it and the real market price was actually driving the lending, as opposed to the creation of artificial supply/demand.
@@fahad-m62 exactly. And I done know how the dude didn’t see his that made sense. Maybe now he does
Stop making false arguments. No one is for eliminating Fannie and Freddie in Congress. Maybe You could find 1 or 2 members, out 535. What the debate is about is wither they both can leave their conservatorship with the government after their bailout.
So what this video alluded to about some ideological differences (should the government be the business of helping home ownership or not, is beside the point).
In Canada, we don't have 30-year mortgages anymore. Also, the banks did a stress test a few years back, to see how many current mortgage holders would be able to afford their own mortgage had the rate gone up. 25 years is the maximum you're getting nowadays.
1:25 2008 lol
why is there a need to reshape? i dont really get any msg from this clip
By making loan easily available for everyone they make home more out of reach for everyone. 😂
Yep.
Bingo.
Fannie and Freddie don’t make home affordable. They shift costs from interest to asset price. Housing costs more to acquire because Fannie and Freddie keep interest rates down. No one is really better off.
Fannie gay. Freddie might be.
Had trouble following the logic of this person's explanation of the relationship between banks, Fannie and Freddie, and "Investors". I think following the money through a few examples would be helpful.
You want to buy a house. Banks will lend you money (mortgage). Banks sell these mortgages to Fannie and Freddie, so that banks can lend more to people with the proceeds. Fannie and Freddie securitize these mortgages and sell to investors (mortgage backed securities).
Then those MBS’s are packaged into tranches based on their credit rating (CDO’s)
this video is so misleading. Many countries that don't have these kind of companies have much lower mortgage interest rates than US does.
So the government own Fanny and Freddie in the name of keeping mortgages low. Let's take a look at the affordability of housing since they took over...
When the big crash happened, the government should’ve broken the big failing banks up, letting multiple smaller institutions take on the loans and deposits. Big government should stay out of banking - an already heavily regulated industry. Let smaller institutions step up. We have already seen the trend for years of big banks eating up smaller ones. If we get to the point of having only a few large banks controlling the industry, then the nation really hurts if one fails.
3 months after closing with regions bank today I received a letter from Fannie may they purchased the loan..
Same. That's why I'm here lol. Except Freddie Mac bought mine
The government should not insure banks. Banks should be held to standards of course and shouldn’t lend a dime to people with bad credit. A home is not a blessing if you are broke. People should learn that before ever trusting a bank. You should always use a fixed rate mortgage and put 20% down. If you can’t do that. You can’t afford it. Find out a may to make it work so one day you can afford it. Saving money now can help a lot in the future.
If they get rid of both fm's, then most houses would be rented. Would that not raise rental rates even more than the 60% they have already risen. Wouldn't that allow more money to the wealthy from the middle class further destabilizing our economy? And last, now is the American dream =40-50% of income going to rental and then what is left over to go into the economy? How will that affect car sales, education, entertainment, etc? If their is a way to get more money from the middle class they will find it and take it, no matter what it does to the economy. If people do not buy stuff, the economy will not make stuff and then where is Gdp and investment?
My 2¢ is that 30 year loans are a blessing: smaller payments, more time to pay, you can refinance, you can add your credit card debt to the mortgage (which has a lower interest rate and is tax deductable) etc. In mexico, no bank lends you for a 30 year mortgage, the best you get is 20 years fixed rate. If you're working, government lends you to buy a house with low interest rate, but it's a small amount. Government involvement in this case, I think is good, as long as the mortgages are sound and meet some standards.
Except that the mortgages are not sound and the government takes on a huge risk all at the taxpayer's expense. If you want a house, pay for it yourself - don't force others to do it for you.
If private banks think these types of mortgages are too risky, then they're too risky for the government as well.
BruceMagnus Should be a law against refi for cash out because that’s where a lot of people get in trouble
The Federal Reserve Banks also uses MBS in their money mechanics.
privatizing anything is better than big government.
Good Video, concise and informative.
Subscribed
Private sector is so great that people are homeless while there a millions of empty homes and buildings.
Homeless people choose to be homeless because they are lazy and addicts.
Hmmm, sounds like the mobile home crisis already, privatized turn into pricier. Not that privatization is bad, but greed is bad.
Why is greed bad?
Greed is the current system of homeowners forcing the government to subsidize ultra-risky mortgages at the taxpayer's expense.
The best solution is privatization - if you want a loan and a bank thinks it's profitable to give you one, let them. Otherwise, pay for the house yourself with your own money.
Get rid of them. We can still have a 30-year fixed rate mortgage without them
Nice video thank you
it sounds like here the only issue is that the 30 year mortgage might go, but even then how hard would it be for a private company to do the exact same thing? also the idea about the first deposit rising exponentially could be saved with a "help to buy" scheme that is similar to the UK, where new homes receive initial down payments / deposits that are relatively tiny.
Remember the last time you got involving in the housing? yea you took the whole world down with you
The so called american dream, yea so other ppl from other Country have to suffer from you americans
How much do these organizations pay banks and other lenders to take on the mortgages?
Fanny and freddie are the reason home prices are so high for middle and low income people
Supply and demand drive up home prices not loan companies lol
@@BigRed2 , indeed, the loan companies increase demand for housing.
Incorrect. Fannie and Freddie are the reason home prices are “affordable.” Again, rewatch the video and pay attention to the part when they discuss the home prices BEFORE Fannie and Freddie….
Wow great informative video
Wrong fact, in other countries the 30 y mortgage doesn’t exist…wrong! There are many countries in Europe even in 3 world where the 30 y mortgage exists.
Mortgage is essentially rent to own with the bank owning your house until the mortgage loan is paid off in full. In fact people should do rent to own when selling a house to avoid using those corporations if possible, but most don't want that kind of hassle. But it is about time we discontinue this consumption of tax payer money on home lending. The only time when you truly own your house is with a fully paid off mortgage loan.
Honestly, I think that while this is important. There are many more important things that should come before this.
Andrew Fessick many believe generation wealth and stability begins with home purchases. This is extremely important to many.
This is simply not true.
In Germany you can borrow 90%, fixed 30 year mortgages, and at very low rates, and frankly the process is much easier.
Take it from a real estate developer whos lived, worked and owned homes in both the US and Germany.
"Noone would know how the market would like like without Fannie and Freddie" Lol are you for real? Just look at the time before 2008. You literally just explained it like 2min earlier in the video.
Tu caída será dolorosa Wall Street
BANKS caused 2008 financial crisis
I'm guessing that this wouldn't affect VA loans given that they're backed by the VA and not Fannie and Freddie?
Michael Wargo But don’t they get 0% down?
VA loans are backed just like an FHA, or USDA loan would be. By the government. But in this video, they are basically explaining how the government is backing ALL mortgages, it’s just about how much liability they are assuming and how it’s sold off on the secondary market.
@@hannesproductions4302 you have the option of no money down or whatever you can put down... But yeah...
VA is backed by Ginnie Mae
So l should by shares?
Thankfully he didn’t manage to do this before he was kicked out of office would have been a disaster
The main reason of the 2008 crisis was because of the government support of fannie and freddy. So it may be more expensive, but I would rather that over a global financially crisis. Privatise it.
If you can’t afford a house don’t buy one
Millions of Americans is not even one percent of Americans...
Tens of millions of Americans is ten percent of Americans.
Hundreds of millions of Americans is one hundred percent of Americans...
0-0
What is a non-bank lender?
Well, there go my hopes of owning a house
Absolute bollocks lads, cop on
“You can always bet on America”...
Short the Student Loan securities!!
Funded (owned) by the Norway oil fund ...?
Yeah they were the one causing the crash by consoliding sub prime .
so much redlining so many student loans
DIAF
If they want to change Fannie and Freddie's roles in the housing market, then the government would have to come up with new laws and regulations for banks and non bank lenders as well. But first, BRING BACK GLASS STEAGALL AND BREAK UP THE BIG BANKS SO THAT THEY DON'T GET TOO BIG TO FAIL AND CRASH OUR ECONOMY AGAIN!
How about we let them do all the risky loaning and when they fall short, let them crash.
Is this the definition of stupidity?!!!
Makeing the same thing and waiting different results ? 2008...
Isn't WSJ a wannabe Pew News?
1:07 - 1:17 I’m soooo confused
I'll be honest, I don't really get it either. Like why would investors back them?
imtypingwords 41 when the mortgages are sold in funds to investors, those investors profit off of the loans. When a person buys a home, their mortgage has interest attached to it. This is how the person who gives the loan makes money. But private people - Investors not banks- can buy forms of these loans to also make money. It works kind of like buying a bond or treasury - you get interest on owning part the debt, or loan, and therefore make money, that is guaranteed by these companies and the government.
I will never take out a mortgage.
student loans
Socialize housing.
Grey Mind join the military to experience that
Oh come on for a 4 minute video it takes you one minute before you can jump into the topic u can do better than that
Hi
"They say that the private sector should be filling that role"
Sick idea mate worked in the past.
Everyone should go back to the 10-year fixed rate mortgage.
Oh thank goodness. FM has been a thorn in my side. Ready to get govt out of real estate altogether. The cost of a home is the cost of a home. Ppl need down payments and need to be realistic abt what they can afford. Taxpayers foot the bill for the mistakes made by ignorant homeowners now, against their will, thats fascism. Interest rate is a different subject. Audit the fed if you want to stop being at their mercy on rates.
If republicans could they would privatize the air we breathe
Trump simply wants to consolidate power with the big players (his doners). Fannie and Freddie make it a level playing field but dissolving the two will consolidate power with the biggies who have enough money to shape the Market to their vision. It has never been about the people
This video has "paid advertisement" vibes. I don't know if it would be a bad thing to have more competition in the market. Wheres the evidence saying things will get more expensive? In every economics course I've taken, more competition = lower prices
50 seconds into the video and it's already all Trump's fault. This narrator is so pathetic it's hilarious
Socialism 😂😂
Early
👍🏿🤘🏿
Disliked . you guys just wish for the next buble
First one
Hi
Hi
Debra Johnson hi debra