Election Outcome Will Shape Future for Housing

I will say the conservatives will probably push for the privatization of Freddie Mac and Fannie Mae, decrease role of FHA, and ending of the HAMP program.

"Before, money was made by Fannie, money was made by Freddie, money was made by banks, money was made by investors, money was made by brokers," says Gumbinger. "Now, people are just selling mortgages to Fannie and Freddie as quickly as they can before the rules change on them. They're saying [to the government], 'Until I know to what extent you're going to be in the game, I don't know if there's a game to play."

Here some more analysis.

But if financial-reform proceedings proved anything, it's that ideas that come from the president and regulators may help move the process along, but they don't write the law. There's little chance that Republicans will let Fannie and Freddie continue to exist in their current forms. There may be less of a chance that President Obama will sign into law anything similar to what his one-time presidential opponent, John McCain (R., Ariz.) proposed earlier this year.

"Obama seems resolute in pushing his agenda," says James Lothian, a finance professor at Fordham University. "Republicans will resist and many of the Democrats who survive what looks to be an out-and-out bloodbath will think twice about following the Obama party line."

So what will happen to the mortgage market? Right now it seems to be humming along just fine - at least in terms of new originations and refinancing. Banks have shored up their lax underwriting policies, leaving few loans that wouldn't fit into Fannie and Freddie's new-and-improved standards.

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