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Remake of Fannie, Freddie shrinks Fed's role in housing

March 5, 2013 @ 9:53 am

The Federal Housing Finance Agency (FHFA) announced that mortgage giants Fannie Mae and Freddie Mac will create a new joint company for securitizing home loans. The move is viewed as a step toward shrinking the government's role in the mortgage market.

The government-sponsored enterprises, which started receiving taxpayer bailout money in 2008, help finance about two-thirds of U.S. mortgages. Edward DeMarco, the acting director of FHFA, said he wants to shrink Fannie and Freddie's footprint in order to reduce the risks to taxpayers.

"The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future," DeMarco told the National Association for Business Economics.

The new company will be owned by Fannie Mae and Freddie Mac. It is not expected to begin securitizing loans until next year. The new company will have a separate chief executive and board. Congress will have to decide how the securitization platform works as well as determine whether it should be privatized.

"We are on a path to replace the outdated proprietary operational systems of Fannie and Freddie," DeMarco said. "It could be turned to some form of a market utility."

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Comments (3)


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  • SickofSeattleite wrote...
    freddie and fannie should not have been bailed out!
    March 6, 2013 5:47 am
    our own govt is who forced them to make loans to people who could not afford it. They also bought loans from other banks... when i bought my house it was not owned by them, then my loan got sold 3 or 4 times.....then the next thing i know fannie owns me and will do NOTHING to help me at all!!!! Nothing like getting screwed by your own govt while everybody else gets everything from them FOR FREE. Meanwhile I work my ars off to support my family of four excepting NO handouts when I qualify for SEVERAL!!!!! It makes me sick how i LET myself get taken advantage of. Fool me once shame on me. NEVER AGAIN!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Rangerhawk wrote...
    About 10 years too late
    March 12, 2013 7:20 am
    The catalyst of the Great Recession. If only the Democratic ruled Congress would have allowed Bush to reign in this entitlement-credit scheme, we could have averted the whole thing!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Cameron wrote...
    But if you shrink Fannie and Feddie...
    March 13, 2013 5:31 am
    Where will Barney Frank go for finding dates? Harold Moses.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }