The problem with government sponsored enterprises like Freddie Mac lies in government cronyism. It doesn't matter if you run the company according to sound principles because the government is there to fix it if you screw up. Jacksonville Business Journal said Freddie Mac announced on Wednesday it will "offer loan-to-value ratios on home mortgage refinancings of up to 125 percent for qualified borrowers." Isn't this part of the kindling for the great fire that burned us economically in the first place?
Last time I looked, home values were not rising appreciably. There is a glimmer of hope in the "Relief Refinance Mortgage" package. The paper said, "Freddie Mac’s Relief Refinance Mortgage is available to borrowers who are current on mortgages that are owned or guaranteed by Freddie Mac." Perhaps this will help those Americans who are managing to hang onto their properties despite making a fairly bad decision--to pay more for a piece of property than logic dictates no matter what the market happens to be doing.
It seems to me this will create the same situation we're already in, with institutions holding paper with a value less than the numbers represent. I'm not sure what business it is of government to ensure, as JBJ notes, "...borrowers paying less interest over the life of their loan and over time improving their overall equity position." President Barack Obama still pushes for the "affordable homes" the easy way method.
A rose by any other name would smell as sour. Government needs to establish a path for getting out of the mortgage business completely. You'd be amazed what a true free market could do if government would let it.
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