Fannie Mae-No Politics (FNMA)

[Sogo]

I've posted the same thoughts exactly. I put it more like this: the GSEs distort and prevent price discovery from happening as it would in a more free or totally market. In any situation, if you have a guaranteed buyer of something (mortgages in this case), would the price go down? No! It goes up. Same often happens when the gvt subsidizes things (like college tuition). Very simply, if there was no guaranteed buyer of mortgages, banks would have to be more careful about lending. Yes the GSEs make the 30 year loan possible. It makes the MONTHLY payments more affordable, not necessarily the total price. The GSEs' very existence as a guaranteed buyer of mortgages contributes to the high prices of houses (relative to income). Look at that data (income to house prices) and you'll see a very steady ratio going back hundreds of years. But that ratio began to change when the GSEs were born. And then house prices skyrocketed compared to incomes in the 1990s once the politicization of the GSEs' mission became more forceful. That's a bigger reason for price increases, I think, than the mere existence of the GSEs as guaranteed buyers of mortgages. But Any entity like the GSEs can't be immune from such political interference for too long. And without a guaranteed buyer, mortgages and houses would probably be cheaper relative to incomes. I'm long FnF, but nit necessarily because I'm a true believer in them. I do want basic assistance and protections for lower income families, yes. I just know this gvt is addicted to interfering in markets and would never have the guts to try a transition to a more free market housing system, even if it would lead to lower house prices, and therefore I think the GSEs will remain.