While both Freddie Mac and Fannie Mae play a large part in the home loan market, the government-sponsored enterprises are trying to plan for the future, where the process and availability of residential finance will be easier for consumers.
Fannie Mae was previously managed in a way that benefited the shareholders of the GSE, but Timothy Mayopoulos, president and CEO of Fannie Mae told the National Association of Realtors that this is not the case anymore. The main focus for the GSE is now the taxpayers, and this is easier due to the organizations positive financial situation. This includes $28 billion already paid to the Department of the Treasury.
Mayopoulos explained that Fannie Mae is still working to ensure the housing market continues its recovery in a satisfactory manner, according to the organization. This includes many jobs revolving around the mortgage market, including helping loan borrowers who are under financial stress, create more business to further improve the overall situation for loan borrowers and fund the home loan market in the country.
Roles must change for GSEs
Both Fannie Mae and Freddie Mac have played significant parts in the market, but the model will likely have to transform to help consumers in the future, Mayopoulos said in the report. This means that the two entities will need to scale back their influence in the market in the future, which will help more private organizations improve the market.
"We've taken steps to attract more private capital to the market, but private capital is opportunistic and leans in when things are good and out when things are bad," Mayopoulos told the NAR. "There remains little evidence of substantial private capital ready to meet market need, and we continue to be concerned about market capacity."
Help from the GSEs possibly contributed to the heightened levels of mortgage applications recently, due to more consumers being encouraged by low home loan rates and real estate records. According to mortgage records from the Mortgage Bankers Association, applications rose 12.6 percent during the week ending November 9, compared to one week earlier.
Additionally, the Purchase Index increased 11 percent from the same time period, the Weekly Mortgage Applications Survey added. Refinances also climbed 13 percent, which was the first time in five weeks a rise occurred.