Mortgage Reform that could unleash the next Big U.S. Stimulus
The Financial Times / Meredith Whitney reported that Freddie Mac wants to enter the secondary home equity loan market in a win-win for the government, Wall Street, and consumers with Mortgage Reform that could unleash the next big U.S. stimulus.
The U.S. housing market is harboring the potential for unprecedented economic stimulus that wouldn’t require any federal spending, according toĀ Meredith Whitney, the one-time OracleĀ of Wall Streetā who predicted the Great Financial Crisis.
Meredith noted that mortgage finance giantĀ Freddie MacĀ asked its regulator last month to enter the secondary mortgage market, or home equity loans, which allow homeowners to borrow against the equity in their houses. Such borrowing can be used for vacations, weddings, new cars, investments, medical bills, or starting a business. In other words, it’s more money that could power the economy.
Letting Freddie Mac initiate this mortgage reform for home equity loans could start putting $1 trillion into consumers’ wallets as soon as this summer and $2 trillion by the autumn, Whitney estimated. If fellow mortgage giantsĀ Fannie MaeĀ and Ginnie Mac follow along, the potential stimulus could top $3 trillion.
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