Fannie Mae-No Politics (FNMA)

[bmp152]

Malebaboon, I think you provide an excellent dose of realism concerning the ultimate fate of FnF. One that is unbiased against your current position as a shareholder. Do any of us from a shareholder perspective want FnF to become a mutual? That answer is certainly no. However, recognizing the major flaw in a stock-motivated housing market is insightful. While too big to fail banks did push bad loans on FnF, the GSEs were not without any wrongdoing. They may not have originated the loans, but they also did not hesitate to question underwriting standards and sudden housing bubble. Likewise, they were quick to push that bad debt onto pension funds, etc. A mutual partially removes temptations for loan originators to be less than thorough to appease shareholder driven growth.

That being said, I think the other viable alternative is to let the mortgage industry remain as is, driven by shareholder cash flow. However, let's say 5% of revenue is directed toward an emergency relief fund to protect against inevitable cyclical housing downturns. Because let's face it, when the mortgage market is 25% of the economy! the gov will always rescue that industry in times of crisis. To do otherwise would be catastrophic.

Just my two cents, which is ironically worth less than that. :)