Comments for If Fannie Mae Goes Out of Business, How Will It Enforce Sanctions Against Strategic Defaulters? at http://www.cepr.net , comment 1 to 3 out of 3 comments http://www.cepr.net Tue, 21 May 2013 20:09:26 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/if-fannie-mae-goes-out-of-business-how-will-it-enforce-sanctions-against-strategic-defaulters/#comment-1180 By the way, bankers, Fed chairmen and Fannie/Freddie executives are not the only ones who don't see the dangers of real-estate bubbles. Congress did everything it could to reinflate the bubble and if they had their way we would be back in 2007. - skeptonomist Sat, 26 Jun 2010 04:07:28 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/if-fannie-mae-goes-out-of-business-how-will-it-enforce-sanctions-against-strategic-defaulters/#comment-1179 It is unlikely that Fannie and Freddie would vanish entirely, but possible that they would go back to being government-run as Fannie was originally. Government bureaucrats might not be able to spot real-estate bubbles and see their downsides any better than executives in the private sector, but they certainly would not see the short-term upsides of inflating a bubble with crazy lending policies (unless they have the responsibility, like the Fed, of boosting the economy out of recessions). Even Alan Greenspan at least claimed to finally see the limitations of pure self-interest on the part of executives. - skeptonomist Sat, 26 Jun 2010 04:01:01 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/if-fannie-mae-goes-out-of-business-how-will-it-enforce-sanctions-against-strategic-defaulters/#comment-1151 Mr Krugman says: "During those same years (Mid 00s), Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization" http://krugman.blogs.nytimes.com/2010/06/03/things-everyone-in-chicago-knows/ Mr Baker says: "They did not alter their loan buying behavior at all (actually they became less cautious) as house prices grew ever more out of line with fundamentals." And the answer to your question is plainly in the article. FHA and whatever new government entity that follows Fannie/Freddie can deny mortgages to defaulters by choice. Of course "Mortgage Bankers" would like their old deadbeat customers to try it all over again in a few years. That is how Mortgage bankers get comissions; they fob the risk onto someone else, and in extreme cases, conspire with borrowers to comit fraud in the loan applications. And yes, Fannie/Freddie executives should be on the GSA pay schedule by now. - AndrewDover Fri, 25 Jun 2010 03:03:53 +0100