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The American dream of homeownership has turned into a nightmare for many citizens, as they're now left paying mortgages worth more than their homes. At the centre of this nightmare is the role of Fannie Mae and Freddie Mac, the two government-sponsored mortgage lenders, that many critics say helped inflate the country's housing market.
"If you look at these institutions you have to start thinking about winding them down ASAP and then figure out how to transform the system from where we are today, which is really a government-backed system…and transition to a well-functioning private market that you like have in other countries," Matt Richardson, New York University economics professor tells BNN.
Anthony Sanders, professor at George Mason University, says the current system makes it easy for the two agencies to be swayed by the whims of politicians.
"Fannie and Freddie tend to be vulnerable to Congressional whims, if a certain Congress person who's very powerful wants them to buy more [mortgages]…we'll probably see that happen," Sanders tells BNN. "That is all fine as long as the economy doesn't go into a tailspin and house prices continue to go up," he says.