Looking ahead, McTaggart expects GSE reform to take another five years, with some continuing government role, following the "market failure" during the credit crisis.
Kevin Petrasic -- a partner in the Global Banking and Payments Systems practice of Paul Hastings in Washington -- says that "having 90% of the all mortgage loan originations backed by Fannie and Freddie is a bad thing," but that transition away from the GSEs needs to proceed slowly.
"One of the central concerns from a macro perspective of FHFA is trying to make sure that the solution for Fannie and Freddie allows for a continued stable housing market," Petrasic says, adding that "you don't want to go through all this effort to privatize, and to back to where we started."
"I would imagine that the primary agenda for the administration and Congress is to figure out a way to stabilize the housing market for the long term, without reliance on government programs," according to Petrasic.While nobody can predict exactly how GSE reform might affect investors feasting on GSE shares today, "there can certainly be benefits to Fannie Mae and Freddie Mac, and to investors," he says. -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts