You have probably heard how difficult it is to get a mortgage approved if you need to refinance a jumbo mortgage -- pay stubs, tax returns, bank statements, divorce decrees, 8th grade report cards, DNA samples..... That's because jumbo mortgages are not bought and sold by Fannie Mae and Freddie Mac, and so they are less liquid and must be flat-out perfect. Investors must be found, their guidelines must be met, and so these mortgages are both more difficult and more expensive to fund. So what would happen then if all non-government mortgages were jumbo loans? That is a real possibility if the incoming Congress has its way.

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The repeatedly-bailed-out government-sponsored enterprises (GSEs) Fannie and Freddie have become the much-hated poster children of mortgage abuse and Wall Street fraud. And yet even now they refuse to participate in programs like FHA Short Refinance that could help over a million borrowers refinance their underwater mortgages to smaller balances and lower interest rates. So many would argue that they are only too happy to eat at the public trough without giving back and that they have outlived their usefulness. And they are ugly and their mothers dress them funny.

That's not an unreasonable position given the public hatred that the GSEs have probably earned. But what happens if (when?) they are disbanded? Can there be an economic recovery without a bounce in the mortgage and real estate? And can that bounce happen without the biggest movers in the marketplace?

Given the difficulty in getting non-GSE loans underwritten and funded today, that seems doubtful. Employees at several of the country's largest banks have told me in confidence that they either can't fund these loans at all or that jumbos are taking about four months to get processed, underwritten, approved, and funded. Four months for a mortgage refinance! And if you have bad or even average credit? Forget it!

So unless your mortgage profile is one-hundred percent perfect, you don't want to see the GSEs go just yet. As outgoing House Financial Services Committee Chairman Barney Frank, has said, the two institutions should be abolished, but, "The only question is: What do you put in their place?"