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Federal National Mortgage Assctn Fnni Me(OTCBB:FNMA) On Mortgage Finance Act

Right-wing people will most likely appreciate recent views of Senator Johnny Isakson to liquidate Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). However, the appreciation was short-lived when they came to know that Isakson’s new bill would shift the weight of all of the current liabilities of Fannie Mae and Freddie, near about $5 trillion, to the taxpayers. It is considered as a decision that will increase the national debt.

The act

Last month, without any announcement, Senator launched the Mortgage Finance Ac, which would place Federal National Mortgage, as well as Freddie into receivership under the guidance of a newly formed government-controlled Agency. The proposed Act highlights a new securitization measure and payback for the taxpayers. It is applicable over ten years for taxpayers’ rescue of the GSEs in year 2008. However, it doesn’t matter that the two companies have already repaid the amount what they were loaned after crisis.

Analysis is must

Federal National Mortgage and its sister Freddie Mac guarantee more than half of all U.S. mortgages, worth $5 trillion. It is a huge amount that cannot be ignored. The government should think and evaluate results as a receiver and consider the massive portfolio. After it, the government will realize the sum is not less than almost one-third of U.S GDP.

The problems

The Mortgage Finance Act of Isakson will transfer the $5 trillion debt to the government. It would also result in problems such as middle-class Americans might be deprived of future access to mortgages. It will destroy identify of Freddie and Federal National Home without an alternative. It is these two firms that have transformed the dream of home-ownership into a practical reality for U.S. residents. Senator Isakson intends to eradicate all the hard-work of the two companies and implement an untested securitization platform. It can prove to be detrimental for the industry.

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