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Conservative lawmakers have come up with a potential compromise to replace Fannie Mae and Freddie Mac with at least five private firms that would issue mortgage-backed securities with explicit federal guarantees. Like Fannie and Freddie, the new entities would be restricted to buying loans that meet certain standards, including size caps. The firms would be required to hold much more capital than Fannie and Freddie and would essentially operate like public utilities and not have exchange-listed shares. The approach signals policy makers’ desire to usher more private capital into the mortgage market, where the government currently backs more than nine in 10 new loans. However, the measure also reflects an unwillingness to cut the federal cords entirely. Analysts say the legislation from Rep. John Campbell (R-Calif.) and Rep. Gary Peters (D-Mich.) may be the only plan able to draw enough support for building a private mortgage-finance system that does not entirely exclude the government. The biggest concern of this new system is that it may lead to higher down payments on Conventional loans.
Read More From “Bill Proposes Mortgage Shake-Up”
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Posted In : Fannie Mae, Freddie Mac, Mortgage News, Real Estate
This entry was posted on Thursday, May 26th, 2011 at 8:53 am. and is filed under Fannie Mae, Freddie Mac, Mortgage News, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.