Fannie Mae and Freddie Mac Could be Another Strike Against Republicans

Pay attention Tea Parties. It appears the Republican party may not be ready to put a closed sign on the doors of Fannie Mae and Freddie Mac after years of government mismanagement which led to the ultimate cost to the American taxpayer.

Many members of Congress say they want to end the shotgun marriage between the federal government and mortgage giants Fannie Mae and Freddie Mac, which was arranged in the heat of the 2008 financial crisis. But breaking up could be hard to do.

Despite much rhetoric about the urgency of ending the drain on taxpayers from covering Fannie’s and Freddie’s losses, which stand at $150 billion and could range up to $400 billion, analysts expect fears of setting off another downward spiral in the housing market to prevent Congress from getting rid of the enterprises anytime soon.

Though their star has fallen in Congress, the mortgage giants have only grown in importance to the frail housing market since the crisis. Today, they own or guarantee more than half the $10.6 trillion mortgage market. But more important, for the past three years since the private mortgage market imploded and largely disappeared, they have provided nearly all the financing and refinancing for prime mortgages in the United States.

Because of that, getting rid of them anytime soon would not be possible without causing further big disruptions in the already hard-hit housing market and possibly endangering availability of the 30-year mortgage that has been a fixture for homeowners for 80 years, housing and securities analysts say.