Dear FHFA,

As a FMCC shareholder, and as a real estate broker of almost 40 years, I believe that the FHFA should set goals of 1) Relisting the FMMC and FNMA stock; 2) Removing both entities from conservatorship; and 3) Shelving any proposals to wind down the GSEs ASAP. My view of the housing crises and resulting GSE financial problems is that the GSE’s problems were not as much a result of GSE practices as they were the result of the repeal of the Glass-Steagall Act, i.e., deregulation, which resulted in a wide variety of ill-conceived new lending products and fraudulent activity by mortgage lenders, their underwriters, investment bankers, and rating agencies, all of whom worked together to dupe the GSEs into buying substandard loans. This must be the case given the record amount of cash settlements between the aforementioned and the FHFA. Accordingly, if the GSEs were not at the root of the problem, why should they be wound down and why should American homebuyers and GSE shareholders be punished?

Some people believe that FMCC and FNMA represent too great of a systemic risk to be allowed to survive. Such fears are unfounded, as the GSE system has roots going back to the housing collapse during the Great Depression, and the system seems to have worked well for more than 50 years before the repeal of Glass-Steagall led to the crack binge of bad lending practices that ultimately sank the mortgage market and caused the housing collapse. Winding down the GSEs without damaging the housing market is a pipe dream since the GSEs probably represent 80% or more of the secondary market, and there wouldn’t be enough private entities to fill the void left by their demise, which would be sure to drive up lending costs thereby reducing housing affordability. Furthermore-and most important-one of the reasons that the GSEs have been so successful in being able to attract the vast amounts of capital necessary to conduct their operations is because of the explicit backing of the full faith and credit of the US Government. Huge funds all around the world that buy the GSE’s paper are required by their investment criteria to only buy US Government guaranteed paper, which means that most such investors couldn’t buy private agency debt even if they wanted to, which means that private agencies couldn’t raise the capital necessary to efficiently run the nation’s secondary mortgage market.

The FHFA should set goals to honor the terms of the FNMA and FMCC conservatorship and restore them to profitability because winding them down will damage shareholders, investors, homeowners, and the American economy.

Ronald

Dear FHFA,

I think the only “goal” that Fannie Mae and Freddie Mac should have is to accept only good, quality mortgages for bundling into mortgage-backed securities. That is how any privately-owned company should operate. I think FHFA should release the companies from conservatorship and once again make them part of the private sector.

To give these companies any other “goal” … like accepting substandard mortgages, mortgages from non-credit worthy applicants, mortgages from certain areas of the country, etc. is to invite another financial crisis.

-Jeff

Dear FHFA,

“I’m concerned about recent proposals that would wind down Fannie and Freddie, because these institutions are an indispensable part of making home ownership affordable. Proposals to eliminate that GSEs would be disruptive to mortgage markets, threaten home ownership, and be at odds with the responsibilities of FHFA as the conservator of these institutions under the HERA statute.

Also, I am upset about the government’s conservatorship, which was not intended to be permanent. It could have placed them into receivership but did not. HERA, passed by Congress and signed into law by the President, prescribes FHFA’s duty to conserve value for shareholders and to nurture the institutions back to profitability. Shareholders have rights under the constitution, and FHFA has responsibilities under the law – and both preclude the Treasury’s decision in 2012 to take 100% of profits on an ongoing basis, which permanently undercapitalizes the institutions and does not allow investors any return on their investments.

I want the government to immediately stop the illegal Third Amendment Sweep and allow the GSEs to begin rebuilding their capital base. Fannie and Freddie should be released from conservatorship now.”

-Matt