The Financial Services Roundtable (FSR), a leading lobbyist for the financial services industry, has released a statement titled “Heritage Dismissal of Importance of the 30 Year Mortgage for Modest Income Americans is misguided.” As intriguing as the title sounds, Heritage has not dismissed the importance of the 30-year mortgage.
In fact, the Backgrounder that has the FSR upset points out that government policies should not favor any type of mortgage precisely because a stable home mortgage market is so important. The core argument of the paper is that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are not necessary to preserve the 30-year mortgage.
The evidence: These mortgages already exist separately from the GSE system without any form of government backing. As we argue in the Backgrounder, the best way to protect home mortgages is to get the federal government out of the U.S. housing finance market. More government guarantees would only lead to more risk and less stable financial markets.