Realtors: Freddie Mac Foreclosures Show Extent of GSE Role in Housing
The number of Freddie Mac foreclosures has remained high in most regions of the U.S. Most realtors in Oklahoma agree that this shows how big a role the government-sponsored enterprise (GSE), along with its sister firm Fannie Mae, played in the housing market of the state and the whole country.
A big percentage of properties offered at home auctions in Oklahoma City and in other markets of the state are backed by Fannie and Freddie. Since news came out that the federal government is planning to phase out the two GSEs, realtors and real estate market professionals in Oklahoma all agree that the impact on the home market will be significant, although their opinions differ in terms of the ways this plan will affect the industry.
According to some local bankers, the plan could make purchasing properties from Oklahoma foreclosure auctions and from non-foreclosed channels more expensive. They also stated that it is questionable how this plan could be put in place, unless the government is willing to spend several years on a gradual pullout. Meanwhile, local real estate agents estimate that around 75% of homes sold in the state are connected with the two GSEs in one way or another, regardless of which lender or mortgage servicer is handling the property.
Housing market observers have asserted that the huge number of Fannie and Freddie Mac foreclosures demonstrate how much influence this two mortgage firms have on the housing industry. They stated that both entities have provided market liquidity and have helped shape the whole real estate market. They also claimed that a number of mortgage products created to cater to various market needs had been introduced by Fannie and Freddie.
On the other hand, the mortgage firms have also been criticized for their alleged role in increasing the number of properties that have fallen into auction foreclosures. Some analysts stated that the companies contributed to the housing market crisis by providing loans to those who do not have stable jobs and have poor credit histories in an effort to allegedly increase homeownership.
Primarily, the GSEs have been criticized for having too loose a standard and not being able to protect themselves from risks. Some of the critics of the mortgage firms have also asserted that the massive amount of Fannie Mae and Freddie Mac foreclosures were the products of the firms' failure to price their mortgages in such a way that they would be adequate for the credit lists that the two firms have taken in.
