U.S. Has Subsidized Housing For Decades: Whalen

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August 8 (Bloomberg) -- Christopher Whalen, Executive Vice President and Managing Director at Carrington Investment Services, discusses the state of Fannie and Freddie, and the governments attempts to overhaul the GSEs. He speaks on Bloomberg Television's “Bloomberg Surveillance.” (Source: Bloomberg)

Freddie mac chief executive.

I love the sarcasm.

If you add the numbers up, it seems to be pretty far out there in the normal career planning of the freddie mac employee.

This is forever, right?

In terms of this debate?

Forever the debate, forever the solution.

The president is supporting the hybrid, private investors and the government.

In the house, they're talking about rolling back most of the depression era housing agencies, and they don't really have a substitute other than to hand the markets to the big banks, which is how i wrote about it this morning.

What did the constituents want?

They want that 3.5% mortgage.

They want to be able to buy a house.

At the end of the year when people see the following volume numbers and you have a couple thousand realtors, home builders, mortgage bankers on capitol hill in front of members of congress, they're going to shift priorities.

That is a great point.

I was reading, talking about that, how president obama will get out of the mortgage market . she says it was less of the policy plan than a fond hope your citizens as homeowners could continue to enjoy extremely low-cost mortgages in which banks are all the risk without forcing citizens to finance the bounty.

We have a longer-term issue, which is government has subsidized housing for decades.

They do this essentially by providing a guarantee the private sector can't. in a way, i think the senate is more realistic because it says, come in and take some of the risk but in $1.5 trillion -- it is like flood insurance.

My conservative friends he keeps in the private sector will pick it up, no, they won't. he goes back to the free market price of that loan of yours is six percent to seven percent, ok?

That is the reality if you had pure private sector funding.

I spoke to the ceo of zillo and listen to what he said.

Private capital is a little reluctant to enter the mortgage market because of the uncertainty about what will happen with fannie mae and freddie mac.

If there was more certainty, there were likely be more private funding.

What does the private sector need to see happen before there can be a transition from public financing to private financing?

We probably have to reopen dodd-frank.

For example, skin in the game.

If i had to keep a vertical slice of every part of a mortgage security, how might going to make that work economically?

We're talking about 5% retained interest.

We believe that karen king, if the loan is priced correctly, you don't need the government.

There are so many other obstacles the government has put in our path.

They're telling us how many fees we can put on the loan, total comp, regulating loan officers.

Let's bring in paul barrett.

You have seen decades of regulation, this and that.

You have studied it.

What is the regulation polls right now -- pulse right now?

Are we overregulated?

No, i think you're seeing a pendulum swing back toward regulation which almost inevitably is going to have crude aspects to it, aspects the lawmakers didn't necessarily anticipate.

The idea you will have to fine- tune an historic reregulation -- dodd-frank.


You're not going to get everything right the first time.

But in the wake of a crisis that nearly pushed us into a depression, you're going to have -- government action encouraged the crisis and now what we have essentially said is if you cannot get an agency mortgage, in fha, you cannot get a mortgage today.

That is the reality.

We're all going to be old.

It is not going away.

It's that simple.

This text has been automatically generated. It may not be 100% accurate.


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