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Industry presenter: reprivatization of Fannie, Freddie is complex; reforms could lower borrowing costs if guarantee structure is fixed
Summary
Bill West told the Virginia Housing Commission that decisions about returning Fannie Mae and Freddie Mac to private capital markets are complex and that reforms to the guarantee structure could lower mortgage borrowing costs if they preserve a liquid, well‑insured mortgage‑backed security.
Bill West addressed the commission on policy choices for Fannie Mae and Freddie Mac and their potential effect on mortgage borrowing costs.
West described Fannie and Freddie as government‑sponsored entities that "bundle and securitized mortgages" to provide liquidity to the mortgage market. He told commissioners that the entities' conservatorship after 2008 led to higher guarantee fees and loan‑level price adjustments that have increased consumer borrowing costs. He said Treasury's capital intervention and subsequent dividend receipts have left complex capital and policy…
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