Mandating Mortgage Taxes – Alex J. Pollock

The Federal Housing Finance Agency is the regulator of Fannie Mae and Freddie Mac.

It has controlled them as their Conservator since 2008, amazingly for nearly 15 years.

Fannie and Freddie together represent more than $7 trillion in mortgage credit and dominate the mortgage market.

The FHFA is de facto legislating to create in the nationwide mortgage market a welfare and income transfer operation through mortgage pricing.

Many commentators have pointed out that the FHFA project to manipulate the LLPAs for a political purpose is a distinctly bad idea.

It signals to well-qualified borrowers, “Your credit score is excellent, so prepare to be penalized” It will encourage the growth of riskier loans in Fannie and Freddie, just as the government disastrously did leading up to the housing bust of 200709.