Replies to post #16192 on Fannie Mae Preferred S (FNMAS)

[44centsAKAchoccake]

Not a lawyer, but my understanding is that it's now very hard to "target" programs to home owners that need help (e.g., to minorities). My impression is that what can be done instead is to have broad-based programs in place that help many actual or potential homeowners. Thus the criteria for a QM mortgage and so on. To do these kinds of broad based market interventions, you need someone like FnF. Private companies, but forwarding public purposes.

BTW, Charles L. Schultze did a book called The Public Use of Private Interest (Brookings, 1977). "The basic theme of this book is that there is a growing need for collective influence over individual and business behavior that was once the domain of purely private decisions." In other words, "private public partnerships" are extremely common nowadays. FnF is just one example of many.

It's true that during period of turmoil and systemic shocks to the system, FnF takes a hit. The key is to not let the turmoil occur in the first place! In other words, competent regulation is needed.