The Federal Housing Finance Agency (FHFA) announced Monday 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, says 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“We are on a path to replace the outdated proprietary operational systems of Fannie and Freddie,” DeMarco said.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.”
The author of this article is: realtormag.realtor.org
See the original post at: http://realtormag.realtor.org/daily-news/2013/03/05/fannie-freddie-footprint-shrink-new-company
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