Does the Mortgage Industry Need More Government? Freddie Thinks So

It seems like every time we turn around, the federal government as a new program or idea to help the mortgage industry recoup from the mess that it is in. Each idea is supposed to be a huge step in the right direction toward fixing the mess, but they never seem to work out as planned. So the question is: Does the mortgage industry need more government intervention? The CEO for Freddie Mac says it does.

The government has been helping to support the mortgage industry for quite awhile now since everything hit the proverbial fan. And according to Charles E. Halderman Jr., the CEO at Freddie Mac, the situation is not going to get much better over the next year and the government should continue to do exactly what it is doing.

Currently, the federal government backs about 90 percent of the new home loans being taken out by home buyers. The government has also created more access for lower down payments through the Federal Housing Association as well as promised to pump “unlimited amounts of capital into failed mortgage-giants Fannie Mae and Freddie Mac,” according to an article in the Wall Street Journal. And, of course, we all know about the low mortgage rates which has had some kind of push from the federal government to reach the lows that they are at today.

By January, the Obama administration has plans for overhauling Freddie Mac and Fannie Mae, the two largest mortgage companies in the United States. As a result of this announcement, both companies have had problems keeping employee morale up and even keeping employees who are looking to find other places to work so they won’t be out of a job once the government begins its overhaul. John Courson, a chief executive with MBA, said it’s not the fault of the companies because they have been doing everything possible to mitigate the damage in the crisis.

So what do you think the answer is to the foreclosure? Should the Obama administration continue with a complete overhaul of Freddie Mac and Fannie Mae? Or are there better ways to deal with the situation?