Sununu Advocates for Privatization of Fannie Mae and Freddie Mac Amid Housing Crisis
In the midst of New Hampshire’s housing affordability crisis, Republican John Sununu is pushing for the privatization of Fannie Mae and Freddie Mac. These government-backed mortgage companies are vital in keeping home loans within reach for many working families.
New Hampshire is currently grappling with a significant housing shortage, missing an estimated 23,500 units. This shortfall is driving up demand and increasing housing costs across the state.
Fannie Mae and Freddie Mac play a key role in the housing market by purchasing mortgages from local banks and lenders. This process provides these lenders with the necessary capital to continue issuing loans. These purchased mortgages are then bundled into securities and sold to investors, with Fannie Mae and Freddie Mac ensuring the payments. This system enables smaller lenders to remain competitive.
Smaller lenders are often more flexible and accommodating for borrowers with unique financial situations, making them crucial for first-time or financially constrained homebuyers.
John Sununu, who served as a U.S. Senator from 2003 to 2009, has previously advocated for a shift away from government intervention in the mortgage market. In a 2011 Boston Globe editorial, he argued for a transition to a fully privatized system where large banks would predominantly manage mortgages.
Sununu stated, “Forty years ago, the two government-sponsored enterprises offered local lenders the only alternative to holding mortgages on their own books. But today, that liquidity can be provided by at least a dozen large banks that securitize home mortgages, commercial loans, and other assets.”
He also argued that many existing government programs already provide housing subsidies, making additional measures unnecessary. These include discounted loans for first-time buyers, rental vouchers, and traditional low-income housing programs.
Critics, including Americans for Financial Reform, a consumer rights organization, warn that privatization could result in a more profit-centric lending industry, potentially excluding many working-class individuals from the housing market.
Without governmental backing, the securities sold by these agencies would carry more risk, leading investors to seek higher returns and potentially escalating mortgage payments.
Sununu’s campaign has raised suspicions due to financial contributions from individuals who could benefit from such privatization. He has received $48,000 from executives at Blackstone, a major commercial landlord, and $17,000 from billionaire John Paulson, whose hedge fund is significantly invested in real estate.
Both Blackstone and Paulson have previously endorsed a proposal to privatize Fannie Mae and Freddie Mac in 2017, which, as reported by NPR in February, could be particularly lucrative for Paulson.
Sununu will contest against former Massachusetts Sen. Scott Brown in the upcoming September 8 primary. The victor is set to face Democratic Rep. Chris Pappas in the November elections.
