Have We Built an Economy We Cannot Afford? CapWealth's Affordability Whitepaper — and the Fannie/Freddie Lever Inside It

If you're new here: I'm Glen Bradford. I'm long Fannie Mae and Freddie Mac junior preferred shares — most of my net worth — and I've written the full Fanniegate thesis for years. This post is different: I'm hosting and walking through a whitepaper written by CapWealth Group, the SEC-registered advisory firm led by Tim Pagliara — the founder of Investors Unite and, full disclosure, someone I've admired in this fight for a long time. The analysis below is CapWealth's; the commentary and the GSE emphasis are mine. This is opinion and education, not investment advice. I hold what I write about.

Read or download the full paper here: CapWealth — Have We Built an Economy That We Cannot Afford? (July 2026)

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Why this paper, and why now

CapWealth manages roughly $2.1 billion and has spent two years on a single question: have we built an economy that we cannot afford? They deliberately held the paper back until the thesis was tested. Then, over the last twelve months, it got tested — an energy-price shock from the conflict with Iran landed on households with depleted savings, record debt, and a federal government whose interest bill already exceeds its defense budget. Their conclusion is blunt: the margin for error that American families and their government once enjoyed has been spent. The affordability crisis is no longer a forecast. It is the operating environment.

You don't have to share every conclusion to recognize this is a serious, heavily-sourced document — CBO, BLS, the New York Fed, Harvard's Joint Center for Housing Studies, NAHB. It's the kind of macro framing my usual GSE writing assumes but rarely spells out. So I'm glad to host it, and I think it's worth your time.

The six findings, in brief

1. The fiscal cushion is gone. Gross national debt hit $39.2 trillion as of June 2026, growing ~$8 billion a day. CBO sees a $1.9 trillion FY2026 deficit, debt held by the public climbing from 101% of GDP to 120% by 2036 (past the WWII record) and 175% over thirty years. Net interest doubles from $1.0T to $2.1T. Translation: the traditional "the Fed and Congress rescue the consumer" move has far less room left.
2. Inflation came back — and no one had recovered from the last round. Headline CPI +4.2% in the year through May 2026, energy up 23.5% on the Iran shock, gas near $4.50 a gallon. Real wages are still below cumulative price growth since 2021. When inflation "moderates," prices don't fall — they just rise more slowly.
3. Household balance sheets are cracking. Total household debt hit a record $18.8 trillion in Q1 2026. Credit-card delinquency at a sixteen-year high (13.1%), auto-loan delinquency the highest the New York Fed has ever recorded, student-loan delinquency back to 10.3%. The Fed's own researchers now call it a K-shaped economy — stable at the top, deteriorating at the bottom.
4. The squeeze has reached the affluent. Households at $100k+ face home insurance up more than 50% in five years, maintenance up 122%, and a median-home mortgage payment of roughly $3,100/month versus $1,700 in early 2020. Consumer sentiment hit 49.8 in April 2026 — an all-time low, below even 2008.
5. Housing is the epicenter. Median new and existing homes both sit above $400,000; a family at the median income of $106,800 needs 32% of income for the mortgage on a median home, a low-income family 65%. Prices are up 54% since 2020 and near five times median income (versus ~three in the 1990s). The shortage is about 1.2 million units.
6. Corporate America has its own maturity wall. Nearly $936 billion of commercial real estate loans mature in 2026 — the peak year — with office CMBS delinquency at a record 12.34% and 900+ banks carrying CRE above 300% of capital.

The paper then walks four illustrative households — a $150k upper-middle-class family, $400k high earners, a $120k two-home retiree already running a monthly deficit, and a $3M ultra-wealthy couple — to show the same squeeze expressed at every income level. Even the top decile, which now drives nearly half of all consumer spending, is budgeted to the last few hundred dollars.

The part my readers need to see

Here's the paragraph in the housing section that stopped me cold, quoting the paper directly:

"One development merits particular attention from anyone watching mortgage affordability: rates fell measurably following the announcement of $200 billion in mortgage-backed-securities buybacks connected to the government-sponsored enterprises. As Washington moves toward resolving the status of Fannie Mae and Freddie Mac, the structure of that resolution — and its effect on guarantee fees and mortgage spreads — may prove one of the most consequential and least discussed affordability levers available to policymakers. We intend to address the GSE question at length in a companion piece."

And in the policy recommendations:

"Treat the resolution of the government-sponsored enterprises as an affordability instrument, not merely a privatization event — the structure chosen will flow directly into mortgage spreads and monthly payments."

Read those twice. A $2.1 billion RIA, in a mainstream macro whitepaper aimed at families and policymakers — not a Fanniegate blog, not a shareholder deck — just told its audience that how the government resolves Fannie and Freddie is one of the most consequential affordability levers in the country, and that lower guarantee fees mean lower mortgage payments.

Why that matters for the thesis

This is exactly the bridge I've been building. My argument has never been "free the GSEs because shareholders deserve a payday." It's been that the capital rule, the guarantee fees, and the mortgage spreads are all the same dial — and that lowering mortgage costs before the midterms requires turning it. CapWealth just made the same point from the other direction: from the family budget backward to the g-fee. When the affordability case and the shareholder case point at the identical policy, that policy gets easier to do, not harder.

It also lines up with the construction-and-posture read I wrote earlier today: an administration treating the GSEs as an instrument to lower costs and build supply is an administration building the franchise up, not winding it down. And now there's a companion GSE piece coming from a credible, independent source. I'll host and dissect that one too when it lands.

Where I sit

Nothing here changes my trade — I'm in the junior preferred with the par anchor, for reasons I've laid out at length. What this paper adds is context: the affordability crisis is the political weather the GSE decision gets made in, and the people making it now have a mainstream, data-driven case that resolving Fannie and Freddie the right way is a way to make housing cheaper. That's a tailwind.

Read the whole thing. It's sober, it's sourced, and the GSE section is the least-discussed part of the most-discussed problem in America.

Download the full CapWealth whitepaper (PDF)

Focus on the positives. There are a lot of them.

Disclosure: The whitepaper is the work of CapWealth Group, LLC, an SEC-registered investment adviser, and is reproduced here with the firm's encouragement; CapWealth's own disclosures appear in the document. I am not affiliated with CapWealth. I own Fannie Mae and Freddie Mac junior preferred shares and have been long for years. My commentary is my opinion and analysis, not investment advice, and nothing here is a solicitation. Quotations are verbatim from the paper. Do your own work.

Keep reading

• The construction-loan drumbeat: confirmation, not the trigger — today's companion read on GSE posture.
• It's all one move: ERCF, the senior preferred, and no mega-IPO — the capital mechanism behind a release.
• The GSE preferred cheat sheet — the thesis, the risks, and the ticker map in about 60 seconds.
• The full Fanniegate thesis — ten-plus years, the whole case, in one place.