Fannie And Freddie: FHFA Action Could Permanently Strengthen The Housing Market

Seeking Alpha - November 17, 2014 - November 18, 2014

Seeking Alpha, By David Sims

New opportunities are emerging with the recent leadership shake-up in D.C. due to the mid-term elections. One of the biggest opportunities for both the executive and legislative branches is with the government sponsored entities (GSEs), Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC).

There is a simple solution to fixing the housing market permanently and starting down the path to permanent GSE reform. The Federal Housing Finance Administration (FHFA) has the power to act, under existing statutes, to strengthen these companies. The courts have even ruled that FHFA actions are exempt from judicial review, if the actions fit the purpose of FHFA in acting as conservator. If Congress desires, they can then follow the actions of FHFA, by amending, restating, or even canceling the companies’ charters, much like they did with Sallie Mae.

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