Fannie Mae: No Other Way To Preserve 30-Year Mortgages, Says Bove

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From Rafferty Capital Markets’ Richard X. Bove on Home Ownership

Last evening, as most Americans did, I listened to the President give his annual State of the Nation Speech. I was struck by the following words: “And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans [emphasis added].”

The key part for me was the words that stated that the dream of homeownership should be kept alive. They are important words because in A Report to Congress: Reforming America’s Housing Finance Market prepared jointly by the Department of the Treasury and the Department of Housing and Urban Development in February 2011, the following statement is made: ”The government must also ensure that all Americans have access to quality housing that they can afford. This does not mean our goal is for all Americans to be homeowners [emphasis added].

Roadblocks to home ownership

This Administration has worked hard to put in place a series of regulations which make it virtually impossible for low income households to ever get the financing to own their own home. It is striving to eliminate Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and with it 20 and 30 year fixed rate mortgages. In sum, it has put in place a series of obstacles to homeownership for millions of American households.

Now the President is asking Congress to return to the goal of putting every American into his/her own home (the dream of homeownership). This is the key to my belief that Fannie Mae will be returned to its historical status. The nation needs this company in order to achieve the social and economic goal of letting Americans achieve their dreams.

Fannie Mae is only real option

Moreover, by returning Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) to its old status the American taxpayer gains tens of billions in profits. I think that there is no alternative to maintaining the prices of housing in the United States than keeping 20 and 30 year fixed rate mortgages in place. Only Fannie Mae can do that.

The stock is worthy of speculation.

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