Since placement in conservatorship, Freddie Mac has made fools of many: enforcement officials on a snipe hunt for “fraud” perpetrated by people who are simply rebuilding our communities; the Obama administration, which rolled out program after program while all along Freddie bet against those programs; Congress, which surrendered its oversight to the Federal Housing Finance Agency; and the FHFA, which believes a new program designed to sell Freddie’s assets to hedge fund managers will actually bring in more revenue than selling to local investors.
But most of all, Freddie has made fools of American homeowners.
Anyone who works in finance knows that the real test for what an investor thinks, what an investor believes, is found by watching where that investor puts its money. Freddie Mac’s policies have denied distressed homeowners the right to vacate their homes without a foreclosure. And its investment vehicle has found a way to profit from the misfortune of others.
Solutions to this are simple, but they take political courage.
Congress and the Obama administration must work together to end all the anti-private-market policies in place at Freddie. This will allow for an orderly, organic and fair unwinding of the failed institution.
To the extent that government programs are working, keep them in place to help homeowners. But let there be no doubt that recovery and rebuilding American communities means private investment and local boots on the ground. That is a prescription for recovery no one should bet against.
John Grant represents the Distressed Property Coalition, a group of private residential real estate investors in Washington, D.C.
Rep. Elijah Cummings, D-Md., right, hugs Harold Schaitberger, General President of the International Association of Fire Fighters, after the Congressman spoke at the IAFF's Legislative Conference General Session at the Hyatt Regency on Capitol Hill, March 9, 2015. The day featured addresses by members of Congress and Vice President Joe Biden.