What would happen if home loans were 100% privatized?

In other words, if the government didn't lend money to banks to lend to borrowers. If lenders had to come up with the funds themselves to lend to potential homebuyers.

It seems to me that interest rates would be a bit higher, credit and down payments would mean more, and the housing market wouldn't have the ability to skyrocket in price as it has recently.

Your thoughts?

Is this yet another example of something that would work better if the government would get out of it all together?

...........K, so what if the Federal government didn't insure the loans???

The federal government does not loan money to banks to lend to borrowers.

The federal government only insures a VERY small percentage of mortgages (FHA & VA).

The government did allow the creation of both Fannie Mae and Freddie Mac, but both are private companies.

The Federal Reserve does make some very short term loans to banks, but they don't lend capital to banks to lend to individual borrowers.

The government is mostly out of this industry and the things they have done have been attempts to help the industry (in general).

good luck!

The government does NOT loan money to banks, they insure the mortgages (FHA/VA). Lenders DO lend their own funds (or their investors funds) even on a FHA/VA loan. Home loans are already 100% "privatized".

Well, first off, the government doesn't lender money to lenders. A lot of lenders have their own money, with their own assets, to loan to borrowers. I do home loans at a credit union and I think only 1 time in 4 years we had to borrower money, and it was only for about 1 day. And as a side note, if and when lenders have to borrower money - they borrower it from other lenders!! Example, Bank of America a few months bank lended Countywide Home Loans MILLIONS of dollars to keep them afloat.

Yes, rates would definetly be higher. I have someone right now that I'm refinancing out of a private loan. They're at 7% and I'm getting her 5.625%, a big savings that will help her get the home paid off faster and save her thousands in interest.

I do believe a lot of people would not be homeowners if all mortgages were privatized. I personally would not trust another person with something that big. I have seen people get burned badily by private loans going poorly due to the note holder of the private loan.

Sorry, not a fan of the privatization idea.

....and your FEDERAL taxes would go through the roof so high that you would never be able to afford a house.

Because you don't seem to understand that it's a huge source of profit for the FEDERAL gov't that HELPS US ALL.

That is why it doesn't change.