“The good news is right now there’s a bipartisan group of senators working to end Fannie and Freddie as we know them. And I support these kinds of reform efforts.”
– President Obama, August 6th
Ending Freddie Mac and Fannie Mae will mean two things to the housing industry: higher rates and probably shorter mortgages. This will result in larger monthly mortgage payments.
Fannie Mae and Freddie Mac are government run agencies that have propped up a troubled real estate market over the last several years. The agencies always had a place within the mortgage sector but over the past several years have been involved in over 90% of new mortgage originations. As they wind down this involvement, the mortgage space may change dramatically.