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  • Comment Detail

  • Date: 10/21/14
    First Name: Hiren
    Last Name: Patel
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA65

  • Comment

    The manner in which FHFA has been acting on behalf of Fannie Mae and Freddie Mac as conservator has been slow, inefficient and detrimental to the U.S housing economy and to the average American home buyer. The current macroeconomic situation in housing is a direct result of the profit driven greed of mortgage brokers, banks and other intermediaries that forged documents, lied, cheated, misrepresented, falsified, fabricated, misstated and deceived Fannie Mae and Freddie Mac underwriting guidelines. As a result, housing has retracted and is currently stagnated at best. Flippers, foreign buyers and large real estate investors have dominated purchases of U.S. real estate since 2009 and on. They have the ability to pay all cash and stack their real estate holdings through leveraging their real estate portfolios through private funding and portfolio loans. The U.S. has largely become a renter nation because of FHFA inaction.

    Credit score requirements are right now the single largest barrier to qualifying for a home purchase. Even if a home buyer has the ability to put down 50% to purchase a home and want to finance the balance they are not going to be able to get a mortgage if they have a low credit score, even if they meet other requirements such as DTI, income verification etc... Meanwhile someone with a high credit score that can barely afford 3% as a down payment could qualify, ceteris paribus. Do you see a problem with that?

    The hassle of going through credit bureaus to rectify an inconsistency or inaccuracy is time consuming, expensive and beyond difficult, most people can't handle the frustration that comes along with it. According to a recent FTC study 26% of credit reports were found found to have at least one error on their credit reports.

    While I believe g-fees should be higher for home buyers that put down a lower down payment, I do not believe g-fees should be as high with someone who is able to put a higher down payment. I also believe there should be a loan option available for home buyers that put down 50% or more to allow for a waiver of credit score requirements. Due to the 'financial crisis' it is difficult for a lot of people to get their credit scores back up to FHA requirements.

    The looting of Fannie Mae and Freddie Mac capital reserves through the unconstitutional net worth dividend sweep and the 10% per yearly portfolio decline to $250 billion 'wind-down' is a major concern. The concerns I have are firstly, the 10% per year decrease in the size of the MBS portfolio resulting in the inability to increase retained mortgages on the books to support American home ownership. Secondly, to the stability of the GSE's in sweeping all profits away from the GSE's which will only exacerbate any future problems by limiting their reserves. Thirdly, as a long term shareholder in FNMA and FMCC, I have legitimate concerns about my investment. Fannie Mae and Freddie Mac are the 2 pillars of the housing market and they have been around for decades promoting home ownership and in making financing available for the average American. I see absolutely no need to change them, wind them down, defund, restructure them, or do anything except to allow them to rebuild their capital and conduct their regular course of business, as they have for decades, with strict oversight.