Housing Finance Gets a Shake-Up: What's the Real Deal?
The housing finance world is buzzing with a big change. Bill Pulte, the head of the Federal Housing Finance Agency (FHFA), has given Fannie Mae and Freddie Mac the green light to buy way more mortgage bonds. This could shake things up in the housing market.
A Huge Jump in Limits
Pulte sent an email on January 12th, lifting the old limits. Before, each company could only hold $40 billion in mortgage bonds. Now, they can hold $225 billion each. That's a huge jump! But here's the catch: Pulte says they won't actually spend more than the $200 billion President Trump originally ordered.
Breaking Post-2008 Agreements
This move goes against what everyone agreed on after the 2008 financial crisis. Back then, Fannie and Freddie had to be bailed out, and limits were put in place to prevent another mess. Now, some people are worried this could lead to more risk.
Pulte Calls Reports "Fake News"
Pulte took to social media, calling reports about this "fake news." He said the new rules just give the companies more flexibility, but they won't spend more than Trump allowed. After the story came out, the FHFA said the same thing.
Skepticism from Lawmakers
But not everyone is convinced. Some lawmakers who dealt with the fallout of the 2008 crisis are raising eyebrows. They say that even if mortgage rates go down, it won't help much if there aren't enough homes to buy. They think this move is just a way for Trump and Pulte to look like they're doing something.
Pulte's Controversial Tenure
Pulte's time at the FHFA has been anything but quiet. He's made some big changes, like:
- Firing executives
- Pushing for a 50-year mortgage (which most people think is a bad idea)
- Being involved in controversial investigations, like looking into Federal Reserve Chair Jerome Powell.
The Role of Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac play a huge role in the housing market. They buy most of the mortgages out there and turn them into bonds for investors. Because they're backed by the government, their bonds are seen as super safe.
