Ten-Year Anniversary of the Federal Takeover of Fannie Mae and Freddie Mac

This week marks a significant anniversary in the American mortgage industry. On September 6, 2008,  the Federal Housing Finance Agency (FHFA) placed two government-sponsored enterprises (GSE), the Federal National Mortgage Associate (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), under conservatorship. Prior to conservatorship, Fannie Mae and Freddie Mac were quasi-governmental, but privately-held firms. Since 2008, they became under the direct management of the federal government since the two GSEs already lost $14.4 billion and could have potentially exacerbated the housing crisis that the United States ended up enduring. Aside from distorting the housing market, one of the major concerns about this conservatorship is that the FHFA has taken on so many loans and bit off more than they could chew.

Since I am running into a time constraint getting ready for the Jewish High Holidays, I am not able to perform a full-scale analysis like I normally would. However, I do want to provide some expert opinions and reports so you can make the call as to how Fannie and Freddie have performed over the past ten years.

• American Enterprise Institute (AEI): May 2018 op-ed piece from AEI housing expert Tobias Peter makes the case for eliminating Fannie and Freddie, as well as a June 2018 AEI op-ed piece on the FHFA needs to "curb its insatiable appetite."
• Center for American Progress: December 2017 policy on how the FHFA should approach successful housing finance reform. 
• Competitive Enterprise Institute: November 2017 policy brief on how Fannie and Freddie pose a threat to taxpayers, and why scaling Fannie and Freddie back is the best policy remedy. 
• Congressional Budget Office (CBO): December 2017 report on expanding the program to transfer credit risk.
• Fannie and Freddie: The most recent annual reports from Fannie Mae and Freddie Mac outlining their financial health.
• Federal Reserve: Fed Governor Jerome Powell gave a speech in July 2017 at AEI outlining the importance of housing finance reform.
• Heritage Foundation: October 2017 report explaining how Fannie and Freddie have created moral hazard, and how the housing market should have a system with private-sector competition. Heritage research fellow Norbert Michel also released a May 2018 op-ed outlining the dangers of government-sponsored mortgage market and how the FHFA is setting us up for another mortgage bailout.
• Urban Institute: April 2018 article explaining Fannie and Freddie's move to increase the debt-to-income ratio to improve mortgage availability (see initial July 2017 report).