Treasury housing plan could seek to reduce role of Fannie and Freddie

New York /
Feb.February 09, 2011 12:34 PM

U.S. Treasury Secretary Timothy Geithner will present Congress with three options for reducing the government’s role in the nation’s housing finance system and minimizing the influence of mortgage companies Fannie Mae and Freddie Mac, people familiar with the plan told Bloomberg News. Geithner will release the proposal as soon as Friday, with one plan calling for the elimination of Fannie and Freddie and their government-backed guarantee of mortgages. Under the Dodd-Frank financial regulatory overhaul enacted last July, the administration was required to submit a plan for ending taxpayer support for Fannie and Freddie. The government took control of the companies in September 2008 and has since taken more than $150 billion from the Treasury to cover losses linked to subprime mortgages.

The administration will also offer options for change without proposing legislation, but rather presenting a way to draw private funds back into the housing finance market and reduce the government’s role in insuring mortgage-backed bonds. Ideas for gaining private capital may include increasing the insurance premiums charged by Fannie and Freddie and forcing them to shed loans in their nearly $1.5 trillion portfolios, sources told Bloomberg. The administration also may suggest reducing the size of loans that the government-sponsored enterprises can insure. President Barack Obama met with Geithner and other top aides at the White House yesterday to put final touches on the proposal. [Bloomberg]


Related Articles

arrow_forward_ios
Equifax CEO Mark Begor (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images)
Equifax error might have harmed (or helped) mortgage applicants
Equifax error might have harmed (or helped) mortgage applicants
314 Wilson Avenue in Bushwick, Pennrose Holdings' Mark Dambly (Pennrose Holdings, Hope Gardens)
Pennrose, Acacia land $117M Freddie Mac loan in Bushwick
Pennrose, Acacia land $117M Freddie Mac loan in Bushwick
(iStock)
Mortgage rates falling back toward 5%
Mortgage rates falling back toward 5%
Fannie Mae's Doug Duncan (Fannie Mae, iStock)
Optimism continues slide among would-be homebuyers
Optimism continues slide among would-be homebuyers
A photo illustration of a crystal ball predicting future home prices (iStock)
Home sales, building to slow: Fannie Mae
Home sales, building to slow: Fannie Mae
(iStock/Illustration by Kevin Rebong for The Real Deal)
Existing-home sales leapt 6.7% in January
Existing-home sales leapt 6.7% in January
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
(Getty)
Freddie Mac study of 12 million appraisals shows racial disparity
Freddie Mac study of 12 million appraisals shows racial disparity
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...