GOP Plan to Tax You Out of House & Home

Chuck Muth ...the Jeffersonian notion that the nation would be stronger if more citizens owned their own homes, Congress in the early 1900s created the ìgovernment-sponsored enterpriseî known popularly as Fannie Mae (short for Federal National Mortgage Association). Fannie Mae - and its sibling, Freddie Mac (Federal Home Loan Mortgage Corp.), created in 1970 - are private companies which do NOT get direct money from taxpayers, but which DO enjoy some favorable treatment by the federal government in return for making home ownership more available to more Americans. The essence of these GSEs is this: They dont lend money directly to you, the home-buyer. Instead, once a bank lends you the $100,000 to buy your house, Fannie and/or Freddie buy your new mortgage from the bank. This is what is called the ìsecondary mortgage market,î and it immediately frees up that $100,000 lent to you for the bank to lend to another potential home buyer. This is an extraordinary benefit if you were #11 on the bankís lending list. Their purpose, then, is to help moderateñ and low-income families obtain the American dream of home ownership. ...Their purpose, then, is to help moderateñ and low-income families obtain the American dream of home ownership. ...In the old days,î before Freddie Mac, the 30-year fixed mortgage was almost unheard of in the home-lending market. Today, somewhere around 70 and 80 percent of such home mortgages are issued under such terms. The 30-year mortgage, combined with relatively stable and lower interest rates, have made monthly home-loan payments affordable for millions of average-income citizens who otherwise would still be renting instead of buying. ...once Fannie or Freddie buys your mortgage from the local bank, they generally do one of two things with it: They turn around and sell it to investors (often overseas investors who see the U.S. real estate market as a safe bet and want a piece of the action), or they retain the mortgage in their own portfolio, allowing Fannie and Freddie share-holders and investors to reap the profits from the interest you pay on your home loan. ...Franklin Raines (a former Clinton official; go figure), OVER-stated its earnings to shareholders by a whopping $11 billion. ...Rather than merely assuring accurate accounting, these members of Congress are considering an active role in actually manipulating the market and picking new winners and losers. opinion editorials.com guestcontributors