President Barack Obama indicated he would work both parties to turn the page on Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac – Federal Home Loan Mortgage Corp (OTCBB:FMCC) and build a new housing finance system.

Fannie Mae

Obama was speaking to students at Knox College in Galesburg, Illinois, when he announced he would personally work to cut red tape for responsible families to get a mortgage, though banks might not show interest in the proposal.

Barack Obama: Bubble-less home ownership

President Obama indicated his government is committed to encouraging home ownership that isn’t based on bubbles but based on a solid foundation, where buyers and lenders play by the same set of fair and transparent rules.

He elaborated every home owner should get a chance to refinance his mortgage and save thousands of dollars a year.

Turn the page on Fannie Mae and Freddie Mac

During his Knox College speech, Barack Obama indicated the government would work with both parties to turn the page on Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac – Federal Home Loan Mortgage Corp (OTCBB:FMCC) to build a housing finance system that is rock-solid for future generations.

He indicated a home of your own has been the clearest expression of middle-class security. However, this concept changed during the recent U.S. economic crisis when millions of middle-class families saw their home values plummet.

President Obama highlighted that over the past four years, the government helped more responsible homeowners stay in their homes, besides ensuring fewer Americans seeing their homes underwater.

Bill to abolish mortgage giants

Meanwhile, the House Financial Services Committee approved a Republican bill to liquidate mortgage giants Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac – Federal Home Loan Mortgage Corp (OTCBB:FMCC) and limit government mortgage guarantees.

The bill is set to eliminate Fannie Mae – Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac – Federal Home Loan Mortgage Corp (OTCBB:FMCC) within five years and replace them with a National Mortgage Market Utility to securitize mortgages.

The bill reflects a prevailing view among lawmakers that the two GSEs should cease to exist while retaining some government role to back mortgage lending.

The government  put the mortgage giants into conservatorship almost five years ago.

Senate bill to crete FMIC

A Senate bill is set to create the Federal Mortgage Insurance Corporation which would sell insurance to securitizers of mortgages.

President Obama’s recent speech signals the White House is ready to entertain negotiations on legislation.