Uncle Sam, Uncle Fred and Aunt Fannie

After the housing collapse, we heard a common line from bankers over run by the wave, "We're not in that business." "That business" was real estate. Now, after years of denial, the reality is setting in. The latest data show Aunt Fannie and Uncle Fred are the proud owners of 800,000 homes. The backlog of paper is several years out. Enter Uncle Sam.
A proposal is taking shape that would support the role of Fan and Fred to convert the inventory to rental housing. Seems they are, in fact, in that business. Banks could easily offer special financing for the purchase of properties in their own portfolios. The old adage about location loses some heft because the location is everywhere. The GSEs would have to be ramped up and modified into a massive governmental landlord. Standards for owner occupied refi's would be eased. Certain Congressional leaders will go ballistic. Bringing the supply on line would also depress the owner equivalent rent aspect of CPI that has tightened up over the last 2 years.
The details are far from worked out. Be prepared for some GSE 2.0 in the POTUS chat next week.

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