Story by Les Shaver in GlobeSt.com
Without this federal backing, Jeff Allen, executive vice president of valuation strategy at Clear Capital, thinks different mortgage investor groups could more easily compete with the GSEs.
“Taking the GSEs out of conservatorship will create a more even playing field amongst mortgage investor groups,” he says. “Today, Fannie Mae and Freddie Mac enjoy certain advantages as a result of their federal backing – local and state tax exemptions and market premiums driven by their explicit government support, amongst others.”
With more competition, Allen thinks more innovation could occur. “In an open market – one in which no structural advantages are bestowed upon one actor over another – there’s an inherent likelihood for new thinking and action,” he says. “The incentive structures of that competition can breed innovation.”