Buying houses was at one time the American Dream. But the Great Recession stymied that hope for millions. Now, the federal government wants to help loosen up the home-buying credit markets.
The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, said they have informed the mortgage giants to make more credit available to home-buyers instead of trying to downsize the two companies in the wake of the financial crisis.
According to the Huffington Post, the head of the FHFA, Mel Watt, told Fannie and Freddie to give banks more protection against the risk of bad mortgages. The hope is the extra backup will get banks more willing to lend more money to some riskier borrowers.
Fannie and Freddie had to be bailed out by taxpayers after taking on too many toxic loans in the run-up to the Great Recession. The cost to taxpayers was roughly $188 billion, but the mortgage giants returned $213 billion to the government.