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Mortgage Bankers Association Chief Economist Jay Brinkmann on the impact of Fannie Mae and Freddie Mac’s securitization firm on home loan borrowers ...
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-- -- Some other news right now big news out of Fannie Mae and Freddie Mac no one can forget when the mortgage giant's collapse back in 2008 leaving taxpayers.
To pick up the tab which so far.
Has cost us all 131.
Billion dollars.
Well now Fannie Mae and Freddie Mac are forming a new company to gather to securitize home loans and despite what you might be hearing about this being a positive step in the mortgage market.
You're watching money for the angle you might miss anywhere else and that is this it could end up costing both taxpayers and borrowers more.
Joining me -- -- Fox Business excuse.
It's OK -- -- now chief economist of the Mortgage Bankers Association.
Welcome to the show tell what they.
Changes.
Thanks Melissa good to be here what we're looking at is the system where they take payments about people make on the mortgages.
Processed woman pass them onto the investors who hold the mortgage -- securities.
These are antiquated systems that haven't been updated in years saw a joke that -- out recruiting cobol programmers.
Out of our retirement homes to try and -- and holding together.
So I think our Ed DeMarco and FHFA has the right idea that he doesn't want.
Both firms spending money independently to build systems on the -- Who wants to try and save -- to -- work.
The problem is with the approach taken to actually have Fannie and Freddie own them our outlook is gonna end up costing us money in the long run why what is -- a process.
Well think about it we're gonna -- all the money they spend is less money than that comes back to treasury.
Are under the repayment plan or that the payment plan rather to treasury.
So that your really building a system aimed at Fannie and Freddie securities.
But in the background we are trying to wind them down we're trying to say you know they're not going to be that much longer who knows what the new securitization and.
I usually are you sure that's what really trying to do I mean -- we really trying to wind them down and get out -- this market because that has been the complaint.
Since the financial crisis -- while everyone else got hit with the bay club.
They're about they're still doing pretty much the same thing -- haven't really been reforms.
Your right.
So I think it's how you define -- -- the Mortgage Bankers Association most of the financial community.
Aren't even the Obama White House has come out dollars in favorable plan for replacing them are strong on that while there's been discussion in congress about wanting to do what.
At problem has been coming up with a real plan a real transition and a number of us here in front of the worker on the for some time.
The problem with this particular approach and putting this new company -- Fannie and Freddie.
Is that it's working -- isolation it's not looking at the total picture of what this transition could look like and what were afraid of is that the doesn't take that into account.
We're looking a lot of lost money here that is gonna come box or heard the talks first.
Absolutely -- those.
It -- -- -- clear that ends up picking up the tab in the long run if it doesn't work out.
It happen if you really turn this over this business over to the private markets rather they'll -- -- -- business.
It's been done Fannie met I'm so Jenny may yeah.
A government agency actually relies on private companies to perform this exact function to process the payments provide the reporting.
What we have done -- are comments from what we continue to comment is why not take this group this book of business.
Put it out to the private market and the private capital develop and make it available for not only -- so what is -- grandma -- That you get to that because whenever I say that politicians say that the little -- -- -- getting squeezed out of the market out of Fannie Mae and Freddie Mac don't exist and that you end up taking it.
To the real market out there that the regular guy won't be able to afford to buy a house.
No that's not true what I think of anything dependent spends.
All of -- pricing opportunities we have more competitors out there on the market.
Small balance borrowers who treated better so I think overall the market would work a lot better.
This we -- true competition.
And that the current system I agree with -- does anybody in Washington believe you when you say that.
Although another people believe you well you would probably the probably trying to get everybody goes on a plan and moving forward with a -- -- very got -- Jake thanks so much for coming on up -- -- back.
Thank you.
