Could the Agencies actually privatize?

[Mr Rex]

This entire tangent is moot because it will never happen. But the point I'm trying to drive at is the *advantage* of favorable financing that we want to extend to the poor isn't an advantage when almost everyone else also has access to the same benefit.

But doesn't it "feel" good? Ain't that what's important?

 

[George Hatch]

If we're going to fund an entitlement program to address social issues I want those entitlements to be focused on that target market, and I want to see it acknowledged as an unearned entitlement. Not handed out to most every buyer in a manner that it's no longer providing any actual advantage to the poor.

 

[Mr Rex]

The unintended consequences of Social Engineering reaching the RE market. The over reach is inevitable. See current interest rates etc.

 

[alebrewer]

Are years of artificially low rates not a legitimate reason? Artificially low rates have created a non sustainable economy on the back of RE.

So I think the 'artificially low' part you're talking about is the fact that mortgage rates do not adequately capture the risk portion of a market oriented mortgage rate, no? And yes - I agree with that, with the caveat mentioned in discussion with GH about how potentially catastrophic to the economy it would be were F&F actually 'fully' privatized...

 

[George Hatch]

One "unintended" consequence of RE being financed at non-market terms is that it has increased the property tax revenues. Which means that allowing interest rates to float per market conditions will probably reduce those revenues by way of lower priced sales transactions leading to lower assessed values.

I dunno if we can assume rates would automatically jump past 7%, though. Excluding the SBA programs, the conventional non-residential mortgages aren't subsidized. Although those interest rates have always run markedly higher those are still available at rates of 6% and 7%, so presumably the SFR loans would still be priced lower than that. After all, they're easier to bundle and market.