The housing crisis has led to some rare bipartisan support on at least one issue: the need to gradually wind down the role of the two big housing GSEs, Fannie Mae and Freddie Mac, and thus the role of the government in the housing market. It's a politically popular position right now.

Recall the Obama Administration came up with three wind-down options over time: limiting the entities to helping lower income class borrowers, using them to back private mortgages in economic crises, and using them as a reinsurance mechanism to backstop private insurers. Republicans have praised the general approach.

It will take years for all of this play out, and we may be in for some rethinking once the economy is humming again.

The New York Times does us all a favor by providing a glimpse of what the industry will be like without the big GSEs. A 30-year mortgage will be much harder to come by. Interests rates would rise, especially for urban and rural borrowers. Terms will favor the lenders even more. More fees will be charged for more features, such as the ability to lock in rates before inking the loan.

Until the excesses set in, Fannie and Freddie were able to expand the America Dream to more and more people. But the costs of having to bail them out will be billions. In hindsight, it did not have to be that way. Had the two been better managed, things could have been different. Given current budget realities, there may be little choice but to wind them down. No one is willing to go to bat for them now.

For more:
- here's the article

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