On Point | Podcast How Trump plans to get government out of the mortgage business
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Mar 26, 2025 David Reese, a clinical professor of law at Cornell Law School specializing in housing finance, dives deep into the controversial plans to privatize Fannie Mae and Freddie Mac. He discusses the implications of shifting these giants from government control, especially in light of their past roles during the financial crisis. The potential impact on mortgage rates and housing costs is explored, with critiques from figures like Senator Elizabeth Warren. Reese clarifies the complexities and risks involved, setting the stage for a heated debate on the future of housing finance.
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2008 Housing Crisis and Fannie/Freddie
- In 2008, Fannie Mae and Freddie Mac lost a combined $109 billion after the housing market crashed.
- The U.S. government took them over to prevent a global financial meltdown.
History of Mortgage Markets
- Historically, mortgages were localized, limiting access to credit.
- Fannie Mae and Freddie Mac created a national, then global, mortgage market.
Fannie and Freddie Pre-2008
- Fannie Mae and Freddie Mac were originally government-sponsored enterprises and later became private companies.
- They operated as for-profit companies with public mandates, under weak regulation.