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Still live -- -- -- series here with us -- -- fine.
Here to talk about the future of Fannie and Freddie is their future.
Well I think that.
There's going to be a big future unfortunately for the US government in housing finance because that's the conclusion.
That they're gonna come -- I think that's a foregone conclusion but I think that's exactly the wrong thing to do.
So I don't watch -- happen well what should happen in my view is maybe five different things.
Number one is that we have to go back center there was a day when people put down 20% on the home from nine.
Away from not not the FHA is -- 3% 303 and a half percent down.
Until maybe 2001 or two -- pushed that hard pushed that the United States government pushed back in the name of affordable housing.
From may -- Half of 1% having no money down to 30% having them and about sixty times in addition.
The the Fannie and Freddie when they were making the mortgages that.
They were super leverage they might put down a thousand on -- -- 2000 alone so no one none of the stakeholders and -- house not the mortgage lender.
And not be buyer had any real skin in the game that's why we have a problem if you look at our neighbor to the north Canada.
Who didn't follow this.
This reckless path.
They don't have a housing problem.
One thing okay but put that and that I had -- hindsight part but what do we do going forward well you have to do we got through.
Go back to real skin in the game 20% down we could talk about how we get there but let me -- at the end goal -- 20% down.
We have to kill the thirty year fixed rate mortgage -- to -- in a minute.
We have to kill the affordable housing mandate all together.
We have to.
Re engage the private sector and have it be totally private sector financing ultimately.
And we have to kill in my opinion the tax deductibility.
Of mortgage interest the reason we -- to do those five things is because.
You're killing the affordable housing at that point descent down it's obvious we need to have people with get in the games.
This recession is a balance sheet she driven it's an asset bubble bursting not very.
Drew me and wore us cyclical recession.
Sad isn't it tough fight.
If you're trying to do this kind of thing in the middle reception wit a -- -- debt threatening this economy right now.
But look -- that that that is true and I have no doubt that they'll do exactly the wrong thing they always do OK but.
If you're asking me what we should do that's what we should do the question really isn't too.
Isn't that don't don't let them track you this way can we get off of the heroin okay of government.
Guarantees and housing without any price -- that's not the question the question is can the market function.
-- carry without it.
But it can but again my -- about where we are.
Basically I don't say -- -- but we can't we hear so much money invested in Fannie Freddie right now many are all gone OK fine but you can.
May argue that you can't just shut the doors on Fannie and Freddie and say here to the private sector you have what you can't.
So what do you do what's a little slow IV picks to get us off the -- Methadone OK you have to do it over time period on serious about this if there's an analogy obviously and a metaphorical one.
But what I'm saying is we have let's bring up the down payment requirements over time.
But stick to it let's go to 5% -- 10% then fifteen and twenty you don't.
I'm Fannie and Freddie loan on faith right let's phase in the private sector let's reduce Fannie and Freddie -- involvement.
And lets you don't bring in the wife gets out of their thirty year.
Because the thirty year was.
In the Great Depression let's make sure people don't have interest rate risk right you fix -- -- -- for thirty years but you can't there's no free lunch or what happens is the interest rate risk.
Is shifted to the bank because if interest rates go sky high during the thirtieth let's -- interest rates never stay the same for thirty years.
The risk is on the lender since the lender is essentially United States government or we're doing shifting the interest rate risk.
To the taxpayer so the thirty year fixed in Canada they do not have thirty for XF five year mortgages and you have to refinance and you know -- -- -- interest -- -- up.
You've got a problem okay.
But we can't promise every taxpayer there's no.
God given right to a thirty year fixed mortgage and is no god given right.
-- -- you go back of the 20% down payment all the stricter rules and then all of a sudden you have the argument coming back that people deserve to get -- with the American dream you're gonna find the fight.
To get people in homes that can't afford its annual.
I -- what it's -- it's become the American nightmare.
And what it's done ironically.
He's picked intended beneficiaries of this policy have been the people most hurt by the policy because what happened is there's one out.
They bought homes at the height of the market.
They destroyed their life savings they can't get out of those loans now so they can't get the benefit of -- prices -- the lower interest rates they can't educate their children that can't go to the movie thinking right we got quickly what's really gonna happen.
I think they're going to.
Tax the banks.
To create a first loss.
That will call me before a quote unquote with a guarantee and they gonna sell it for the American people -- they always through with a bunch -- crap.
That's going to say.
Oh don't worry this explicit guarantee you'll know if you know just insurance backhanded insurance and didn't -- but we -- make the banks pay for fund that pays the first round of losses.
But that's going to be translated to the consumer they're -- -- double down on the affordable housing mandate and it just gonna do just gonna do exactly the wrong.
The only guy rather see them as I -- Amanda OK give myself lawyer with the Meister Stephen again and -- -- the little guy.
They're being below the.
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