Mortgage industry experts are divided over the idea of allowing Fannie Mae and Freddie Mac to increase their purchases of mortgage-backed securities (MBS) in order to reduce mortgage rates, a proposal recently suggested by trade groups. 

While the government-sponsored enterprises (GSEs) could create demand quickly amid a reduction in the Federal Reserve’s presence in the MBS market, some fear this could create a conflict of interest. They also noted that the companies’ demise in 2008 was tied to their outsized portfolios. Loan underwriting has improved significantly since then, but the memories could create political challenges.

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