The recent subprime mortgage crisis has put pressure on Congress to act to bail out troubled lenders and borrowers. The American housing market continues to struggle. According to the National Association of Realtors, sales of existing homes fell by 4.3% in August and the stock of unsold single-family homes rose to the highest number since 1989.  More and more homeowners cannot keep up with their mortgage payments, and Congress feels that it needs to act to avoid looking disinterested and out of touch. There is bipartisan support for several proposals, including giving Freddie Mac and Fannie Mae a greater role in the mortgage market.  These proposals are a bad idea. They are misguided and could further damage the long-term housing market.
Freddie Mac and Fannie Mae are private companies that operate under a Congressional charter.  They were created to make a market for low-income higher risk borrowers.… Read the rest