Bill To Keep Fannie Mae and Freddie Mac Alive! by timhoward717.com
Big news, a bill that would keep Fannie and Freddie alive, this is great news. The coup continues. I also am interested in their timing with an impending court decision. I am providing a link to the story on Mortgage orb. which Ron posted in our comments section. I will definitely provide more analysis on this, Keep the Faith
A trio of Democratic congressmen who serve on the House Committee on Financial Services next week will formally introduce a “middle ground” housing finance reform proposal that uses private-sector market forces to appropriately price risk while putting the scale and security of a government guarantee behind the program.
Bill to keep Fannie Mae and Freddie Mac alive
The alternative plan by Reps. John K. Delaney, D-Md., John Carney, D-Del., and Jim Himes, D-Conn., a draft of which was unveiled in January, would establish a new government reinsurance agency that would back all qualified mortgages, but at the same time, all issuers would be required to maintain a 5% private capital reserve to cover first losses.
As per the draft proposal, after securing the minimum level of private capital, issuers would be able to securitize their mortgages through Ginnie Mae. Separately, private insurers would be invited to contract with Ginnie Mae and share the reinsurance pricing and risk, with the private insurer assuming a minimum 10% on a pari passu basis. In addition, the bill would return government-sponsored enterprises (GSEs) Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) back to the private market – thus ending the government’s “monopoly” in the mortgage business – however, the companies would no longer write guarantees and would only serve as issuers.
“We’re going to introduce [the final bill] the week after the Fourth of July holiday,” Rep. Delaney said during an interview with MortgageOrb, adding that the congressmen are currently working hard to revise the bill’s text and that it should have a name and number by then.