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Bouncing back: five years on from Fannie and Freddie
Discussions about the future of the guarantors has gathered pace, with President Obama last week expressing the desire for these entities to be restructured such that there is less burden in the future on the US taxpayer. Draft bills on new mortgage guarantor entities in the House of Representatives and the Senate both favour less government involvement although in varying levels.
However there are concerns that by requiring more private sector involvement that would result in higher mortgage rates to potential homeowners. The housing recovery has been an important source of growth in the US over the past year. It has allowed the US consumer to remain resilient in the face of fiscal headwinds.
We are currently positive on US economic growth for 2014, but recognise that a moderating housing market may dampen US consumer resilience, leaving the baton to be taken up by US industry.
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