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Proposal for Fannie and Freddie

February 15th, 2011 12:07 PM by Sam Kader

Last Friday, the Obama administration released its 32 page proposal for Fannie and Freddie's role in the $11 trillion  mortgage market:

  • Both agencies so far are costing taxpayers $150 billion.
  • Both agencies own or guarantee more than 50% of the mortgage market.

Here are the proposals:

  1. Scaling back the government's role but continuing a limited government guarantee mechanism for mortgages.
  2. Government's pullback that would have the government step in with guarantees largely only during a recession, providing an "emergency backstop" to mortgages to keep the housing market from collapsing.
  3. Limiting the government's role in the market to supporting only low-income buyers through he Federal Housing Administration.

However the faith of both agencies will be, smooth transition and least amount of disruption into the already fragile housing sector will be required.

Posted in:General
Posted by Sam Kader on February 15th, 2011 12:07 PM

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