this guy speaks politics… obviously the title of this article is bullshittery at its finest, the rest of what he said makes for a pretty clear case for keeping Fannie and Freddie around
KC building leader works in DC to save 30-year mortgages
Mar 13, 2015, 12:30pm CDT
http://www.bizjournals.com/kansascity/news/2015/03/13/kc-building-leader-works-in-dc-to-save-30-year.html?page=all
Herman Farrer
Tom Woods, a longtime Kansas City-area home builder, is working on federal housing finance reform as the 2015 chairman of the National Association of Home Builders.
Reporter-Kansas City Business Journal
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One of Tom Woods‘ goals as 2015 chairman of the National Association of Home Builders is to help save the 30-year fixed-rate mortgage.
Woods, president of Blue Springs-based Woods Custom Homes, has built more than 1,000 Kansas City-area homes during a 40-year career, including 175 homes a year at the market’s peak.
Then the subprime mortgage crisis triggered the great recession, and the two government-sponsored entities that buy most 30-year mortgages — Fannie Maeand Freddie Mac — had to be stabilized with a $187.5 billion federal bailout.
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Now, Woods said, the future is uncertain for the GSEs, which provide liquidity to the housing market by packaging and selling mortgages as government-guaranteed bonds.
“If they go away,” Woods said, “the 30-year mortgage also would go away.”
That would lead to shorter, more expensive mortgages, he said, adding that “banks, some because of their charters, can’t make over 15-year loans.”
Woods has been spending lots of time in Washington talking to congressmen and other officials to try to prevent that type of disastrous hit to the economy.
“The economy has not fully recovered,” Woods said, “and one of the reasons is the home-building industry hasn’t fully recovered. At our peak, we represented somewhere between 17 and 20 percent of the gross national product, and you can’t shut down that much of the GNP and expect your economy to function.”
The futures of Fannie Mae and Freddie Mac — and thus the 30-year mortgage — are in question because the federal government, since 2012, has been sweeping all of the GSEs’ profits into the U.S. Treasury, meaning another bailout request could be only an economic hiccup away, Woods said.
Although Fannie Mae and Freddie Mac already have sent the Treasury about $40 billion more than the bailout they received via the Housing and Economic Recovery Act of 2008, Woods said, “they’re not allowed to build any capital cushion” and remain under a federal conservatorship that came with the bailout.
Shareholders in the GSEs have sued to stop the profits sweep and allow Fannie Mae and Freddie Mac to exit conservatorship. But they are under regulatory orders to wind down their asset portfolios, now about $400 billion each, to $250 billion. And Woods said it appears the plan is to ultimately shutter the GSEs.
“We’re not saying Fannie and Freddie have to be resurrected,” Woods said. “But there has to be some mechanism that allows mortgage bonds to be sold with a government guarantee.”
Woods said the NAHB is calling for a system through which private investors and insurance programs would back most of the debt, “with the government only having to step up in the direst of circumstances.”
“If you try to sell these bonds around the world without a guarantee by the U.S. government, then you’re not going to have any takers,” Woods said. “Or if you do have takers, they’re going to demand much higher interest rates.”
In addition to working for preservation of the 30-year mortgage, Woods and the NAHB are lobbying for protection of the mortgage interest deduction and low-income housing tax credits.
NAHB officials and members of local and state home builders associations have been taking their case directly to lawmakers in congressional districts throughout the country this week as part of NAHB’s “Bring Housing Home” conferences.
In addition to working on federal housing finance reform and other issues affecting home builders and buyers, Woods also remains busy on the local front.
He will help staff a builders booth during the Greater Kansas City Home Show, March 20-22 at Bartle Hall.
“We’ll be answering general home-building questions,” Woods said, adding that the 200 exhibitors will allow attendees to learn about the industry’s latest trends and innovations.
“It’s a good place to start your home search,” Woods said.
For thousands of area residents, that search will start in earnest in April, during the Home Builders Association of Greater Kansas City’s 2015 Srping Parade of Homes Tour.
Rob reports on real estate and development.