Has the Government Created a Housing Crisis by Penalizing Fannie Mae?


There has been much discussion about the inflated housing market in recent months. But what about the continuing problems of high rent and low-income earners who need government assistance to find shelter? And with eviction and foreclosure moratoriums ending in the wake of the COVID-19 pandemic, finding affordable housing could be difficult for more people, including the middle class.

Research shows that vouchers in President Joe Biden’s proposed economic recovery legislation would help many people with low incomes afford stable housing. But three in four low-income renters needing rental assistance don’t receive it.

A recent Supreme Court decision gave Biden the ability to fire the leader of the Federal Housing Finance Agency (FHFA), and he did so quickly. But will the Biden administration use the agency to make housing more accessible for low- and middle-income earners?

For that to happen, Biden will need to free mortgage companies Fannie Mae and Freddie Mac from the FHFA’s conservatorship, says Tim Pagliara, ForbesBooks author of Another Big Lie: How The Government Stole Billions From The American Dream Of Home Ownership. And Got Caught! (Congress created the FHFA to regulate the mortgage industry after the housing market collapsed in the Great Recession in 2008.)

“There is no other alternative to meet the needs of housing finance for lower- and middle-class homeowners,” Pagliara says. “Since its creation during the Great Depression, Fannie has been the ghost in the U.S. mortgage machine, making homeownership affordable for average Americans. Fannie and its baby brother, Freddie Mac, are the reason you can get a 30-year, fixed-interest mortgage in any neighborhood in the United States. They serve a constituency that’s very important.

“The FHFA is now a political appointment, and it will change with every administration. President Biden is going to have a belief system about the availability of financing for low- and moderate-income people that Fannie Mae and Freddie Mac serve. And if he’s going to have some lasting impact on that policy, then he has to act within 18 to 24 months and get these entities set on a path out of conservatorship. Fannie Mae and Freddie Mac need capital to fuel their mission of providing long-term fixed-interest housing for the underserved and the middle class.”

Tim Pagliara is ForbesBooks author of Another Big Lie: How The Government Stole Billions From The American Dream Of Home Ownership. And Got Caught! Pagliara is founder, chairman, and chief investment officer of CapWealth, an independent, SEC-registered investment advisory firm near Nashville, Tenn. He was named by Forbes as the No. 1 financial advisor in Tennessee in 2020. In 2014, Pagliara founded Investors Unite, an organization representing Fannie Mae and Freddie Mac shareholders after the U.S. Treasury Department placed the government-sponsored enterprises into conservatorship. In 2018, Pagliara was named Tennessee’s top financial advisor by both Forbes and Barron’s. He’s appeared in Barron’s Top 1,200 Financial Advisors in six of the past seven years.

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