Fannie Mae-No Politics (FNMA)

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Where their algorithms are most likely falling short is robust engineered control feedback loops prefaced by accurate modeling of the housing finance system. Without that, their algorithms will fail when hit with unpredictable scenarios, which are bound to creep in. This takes time to develop. The work was most likely contracted out to the lowest bidder. As usual in big corporate culture, the Indians probably have a good grasp of the critical nature of this, but the Chiefs do not and hence, the project was not properly budgeted. They had a tight schedule to meet, the heat was on, algorithms were written, testing cut short and boom, layoffs. Fix it in combat they say. Boeing is now learning this the hard way with the 737MAX. Happens all the time.

The companies are replacing people with algorithms at the behest of their conservator because they think they can maintain better regulatory control of the market with robots. As far as market footprints go they'll have the same size until others are chartered to increase competition with more financial running shoes. Economically nothing actually changes in the housing finance model other than replacing the systemic TBTF threat with a live and let die free market at best. IMO the whole housing bubble debacle was a result of the powers that be originally creating a closed shop system they could control instead of letting the market do it and they still haven't learned. Just look at what they're trying to write into the GSE charters as a condition of release. Raising capital levels to cover a downturn while continuing to make low cost mortgages available during said downturn. That's a recipe to blow a bubble bigger than the planet the next time the market slows to correct the balance of the market. First thing that will happen is reserves will be depleted to cover losses and continue making loser loans. Pie in the sky is all politicians and regulators have to sell so don't be shocked when all yah get is pie in your face while looking up coz pie doesn't fly