According to The Washington Post, concerns are rising about the amount of mortgage loans being backed by Fannie Mae and Freddie Mac and the inherent risk factors. The two organizations now guarantee almost $7 trillion in mortgage-related debt, 33% more than before the housing crisis. Publicly owned but backed up by U.S. taxpayers, the two organizations now account for more government-backed housing debt than at any other point in U.S. history, according to data from the Urban Institute.
Taxpayers are shouldering much of the risk, while a growing number of homeowners face debt payments that amount to nearly half of their monthly income, a threshold many experts consider too steep. Roughly 30 percent of the loans Fannie Mae guaranteed last year exceeded this level, up from 14 percent in 2016, according to Urban Institute data. At the FHA, 57 percent of the loans it insured breached the high-risk echelon, jumping from 38 percent two years earlier.
This article is based on interviews with 24 senior administration officials, regulators, former regulators, bankers and analysts, many of whom warned that risks to taxpayers have built up in the mortgage sector with very little scrutiny.
The binge in high-risk lending has some executives and regulators on edge and could grow problematic if the economy continues to weaken or enters a recession, as more economists are predicting could happen within a year. Two Freddie Mac officials told a government inspector general earlier this year that certain loans they had been pushed to buy carried a higher risk of default, and problems could multiply when the economy slows.
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