House Proposes To Wind-Down GSEs Within 5 Years

Tyler Durden's picture

There will be an increasing cry of 'not fair' from the Perry Capital's of the world as Jeb Hensarling unveils a dramatic plan to overhaul the GSEs (and broad housing finance in general).  The chairman of the House financial services committee wants Fannie and Freddie to be wound-down within 5 years - removing the explicit government guarantees and demanding that:

  • *HENSARLING SAYS HE WANTS HOUSING POLICY FOCUSED ON TAXPAYER

and not:

  • *HENSARLING: U.S. HOUSING FINANCE CAN'T BE DESIGNED FOR INDUSTRY

Higher down-payments for FHA loans, limited to first-time-homebuyers only, and reducing the conforming loan-limits are all likely to drive the hedge funds to more litigation and complaint that this will end the housing recovery and their dividend stream. Hensarling wants to create a securitization platform 'utility-like' entity with the government serving only as a catastrophic reinsurer.