Get the Feds out of the Mortgage Business

The housing industry, realtors, builders, mortgage lenders, appliance makers, and others, back in Great Depression 1.0 persuaded Congress to give them a handout.  They claimed a shortage of mortgage money was crimping the industry's wings, and housing  was needed to provide jobs and "home ownership".  And so our tax money was channeled into mortgages thru Fannie Mae.  Actually, Fannie Mae made good money for many years.  It borrowed at the low Federal T-bill rate because everyone believed that the US government would back up Fannie's bonds, and it loaned at the commercial mortgage rate, leaving a comfy profit margin.  Fannie Mae even sold stock to private investors, with dividends paid out of the juicy profits.  Fannie Mae (and its younger brother Freddie Mac) offered cushy jobs for retired politicians, and nice profits to investors. 
  In the 1980's Fannie got into, or started up, the "secondary mortgage market".  In this deal, they would buy existing mortgages from the "primary" lenders, mostly banks.  For a while this made money, but the side effects gave us Great Depression 2.0.  The primary lenders found that they could make money on anything, do the mortgage, sock the buyer with hefty paperwork fees to do the deal, then sell the mortgage to Fannie. If the mortgage went bad, borrower skipped town,  property wasn't worth the money in the mortgage, the primary lender didn't care.  He made his money the minute Fannie bought the mortgage off him.  And so the quality of the mortgages went down hill.  Suddenly investors stopped loaning money to Fannie, and shortly after Great Depression 2.0 stalked the land, Fannie got taken over by the US treasury.  $188 billion of your tax money was poured into Fannie to meet it's obligations.
   With this sorry history, we ought to get the Federal government out of the mortgage business.  There is plenty of private money to finance home buying.  Remember, a mortgage is a VERY desirable deal for the lender.  His loan is secured by real property, something tangible and salable.  If the borrower defaults the bank gets the house.  And, the borrower is highly motivated to make his payments.  No spouse wants to explain to his partner why they and their children are getting pitched out into the street.  
   If private investors will buy US T-bills that only pay 3%, they will be happy to make an equally safe mortgage loan at 4.5%.  They will be plenty of mortgage money if we give the mortgage business back to private banks.  And we ought to forbid the selling of mortgages.  When you make a mortgage you will own it til it's paid off.  This will discourage doing mortgages that are bound to fail.