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Politics : THE WHITE HOUSE -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (23353)	10/7/2008 8:17:07 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 25737

Re: Not existing before the government created agencies supported it doesn't equal "wouldn't exist if government involvement ceased". Actually --- in the case or the 30 year fixed rate mortgage --- it pretty much does. (Or, at least, without something like Fannie/Freddie making an after-market, buying up conforming 30 year fixed rate mortgages, they most likely would either not be available in the marketplace at all... or else would only be available at SIGNIFICANTLY HIGHER interest rates.) Market lenders may choose to lend money for 30 years (or even more) to extremely well capitalized and large and solid business, with massive cask-flows, and to sovereign governments... but they would but seldom have any interest at all in taking such long-term risks with individuals (often risking money out past the remaining expected lifespan of said individual) WITHOUT THE GUARANTEE that the mortgage note can be immediately re-sold to Fannie/Freddie thus restoring the bank's capital and enabling it to resume lending. Prior to Fannie/Freddie (institutions founded for this very purpose: to develop home ownership in America) thirty year mortgages were practically unheard of in America... and in nations lacking similar institutions still today, such long-term mortgages are also unavailable.