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Fed: Action needed on housing market

White paper says that Fannie, Freddie need to focus more on overall market and less on themselves

By Mary Beth Nevulis, HousingZone Contributing Editor

January 5, 2012

federal government, housing market, housing policy, fannie mae, freddie mac

The Fed's white paper says that Fannie and Freddie need to focus more on the overall market and less on themselves.

The Federal Reserve on Wednesday issued a white paper to Congress in attempt to fire up policy makers about the housing market’s problems, the New York Times reported on its Economix blog.

The paper chastises government-controlled Fannie Mae and Freddie Mac for showing more concern with their own short-term financial conditions than with the health of the overall housing market.

The Fed is concerned that the collapse of mortgage lending during the financial crisis is hardening into “a potentially long-term downshift in the supply of mortgage credit.” One reason for this, the paper says, is that Fannie and Freddie, which provide the money for most mortgage loans, are scaring lenders by aggressively seeking refunds on defaulted loans.

To read the article, click here.