Atlanta Real Estate Forum asked Dan Forsman, president, CEO and owner of Prudential Georgia Realty, to respond to this recent article from The New York Times explaining how home buying will change if Fannie Mae and Freddie Mac are shut down.

How would home buying change if the federal government shuts down Fannie Mae and Freddie Mac?

Fannie Mae and Freddie Mac will likely not go away. If anything, they will be combined into a single entity. As a result, the level of creativity that has been seen in the past, such as 100 percent financing and ARMs, will disappear and in its place will be a much more homogeneous mortgage product that will require a significant down payment.

Will interest rates raise for borrowers?

Interest rates are going to rise regardless. They probably will not rise short term, but will definitely rise in the long term. Interest rates are so low at present, they will rise.

Would lenders charge additional fees for services such as rate locks?

Rate locks are not as relevant in the current market climate. The volatility and scarcity isn’t there. As for other fees, the traditional fees will still be relevant.

As the mortgage industry continues to change, only the big mortgage players will be able to play. The little guys are being regulated out of the business. The industry consolidation will not play well for a small community bank, who’s core business will have to change. Despite that, everyone will adjust to the level of financing available despite the collapse or merger of Fannie Mae and Freddie Mac. The dream of home ownership is alive and well.