The GSE Plan and Political One-Upmanship

Mortgage and political analysts are trying to figure out the White House's GSE strategy. Supposedly, in less than 24 hours. the Treasury Department 'white paper' on revamping the two will go viral. Everything we're hearing suggests the Obama White House wants to cut almost all federal ties to housing, with the exception of FHA. Keep in mind that FHA — by far — is the program of choice for first time home buyers with Fannie Mae and Freddie Mac concentrating on the low hanging fruit of the refi business. But there is also a fear that FHA will get swamped by new business should the federal apron strings be cut too short. Meanwhile, if mortgage bankers were smart they'd start offering ARMs. But let's face it: Americans love their fixed-rate loans. But getting back to the GSE plan. Perhaps, the White House is trying to find a way to trip up the GOP by offering a plan taken straight out of the Republican mortgage playbook. And if the housing market craters once again, he can say: "I was just following the GOP's lead on this."