Many people believe the time has come to do away with Fannie Mae and Freddie Mac.  Some say it should be merged into the government while others say the government shoud just provide guarantees to mortgage investors in the case of default.

So what is the government’s role in backing the mortgage industry?  What ever it is, what is to be done and how to do it is going to be difficult.  Here is an interesting article from the Wall Street Journal.

By Nick Timiraos

Are Americans ready to give up government guaranteed loans?

More than half of all mortgages in the U.S. are guaranteed in some way by the U.S. government. Those guarantees have helped lower borrowing costs for homeowners, and they’ve allowed more Americans to access long-term, fixed-rate loans.

Those loans have been embraced by consumers because they provide stability of payment, but they were also devised in the wake of the Great Depression to create a forced-savings mechanism that helped homeowners build equity.

Read the full story here