How to Solve the Foreclosure Crisis Essay -- Economics

on that point should be a bifurcated sterning of the housing commercialize. The first and main target of the housing recovery needs to be the cautious restructuring of the government sponsored entitiesGSEsFannie Mae (FNM), Freddie Mac (FRE) and to a lesser extent FHA. Recent upstarts headlines vomit up the combined total mortgage market share for the FNM, FRE and FHA at seventy-two percent (72%) i of the entire industry.The restructuring of those triple entities get out be a dish up of dividing their combined debt into at least ten smaller portfolios which individual investors feces either incorporate into the existing businesses or form entirely new businesses made up of all or any air division of the portfolio(s) they purchase. separately portfolio ideally will represent no more than a 5% to 7% share of the mortgage market so that we no durable have behemoths that are too large to interrupt.Further, the government will in all likelihood have to guaranteefor a limite d period of time and with expectations of profit sharing similar to that of the banking bailouts and in occurrence the funds the banks are now paying back could be apply for the purpose of guaranteeing so as not to offend the publicpart of the initial funding that the private enterprises will need and want in order to get their respective pieces of the mortgage market launched.The breakup of these three GSEs into numerous pieces will help manage the ability of achievement as it is not likely that all ten pieces will fail and as smaller players are easier to manage this will help cast up the likelihood for success.In order for the government to get both the beat out price/value for each portfolio created from the breakup each of these portfolios should have opposite levels of mortgage debt risk. This will incr... ...o handle or avert another crisis should unmatchable come our way in the future and to return to the tax payer the monies it has already paid to bailing out these institutions. Works Cited i A combined market share of 72% for Fannie Mae, Freddie Mac and FHA as indicated by Mortgage foodstuff NoteCIRE Magazine http//www.ciremagazine.com/article.php?article_id=307 (04/01/2009 09/14/2009)also see the NPR report at http//www.npr.org/templates/story/story.php?storyId=98285028 (12/17/2008 09/14/2009) ii BretWhissel Mortgage Calculator http//www.bretwhissel.net/cgi-bin/amortize (09/14/2009) iii American Institute for Economic Research report http//www.aier.org/research/commentaries/583-update-on-the-house-price-trends (10/16/2008 09/14/2009) also see the iTulip report http//www.itulip.com/housingbubblecorrection.htm (01/20/2005 09/14/2009)