FHFA proposes replacement to Fannie and Freddie mortgage securities

New York /
Feb.February 22, 2012 10:00 AM

The Federal Housing Finance Agency has proposed replacing the mortgage-backed securities that Fannie Mae and Freddie Mac currently issue with a uniform security in a strategic plan it sent to Congress and the Obama administration, the Wall Street Journal reported.

The switch would mark a major change for both companies, and according to the FHFA paper, would be a public utility that could outlast the government-sponsored enterprises. The firms currently adhere to individual proprietary systems for mortgage-backed securities. If successful the new mortgage security platform could be accessed by lenders outside Fannie and Freddie.

As a result, the new, uniform security could eventually be a critical step towards shrinking Fannie and Freddie should the government ramp up its efforts to retreat from the housing market. However, Congress and the Obama administration haven’t taken a firm stance on the fate of the mortgage titans and their $5 trillion in guaranteed mortgages.

The Journal noted that the FHFA has been placed in a precarious spot as it was enlisted to help steer Fannie and Freddie clear from losses, but has simultaneously taken criticism for its aversion to principal reductions that would force losses. [WSJ]


Related Articles

arrow_forward_ios
From left: JPMorganChase CEO Jamie Dimon, Goldman Sachs CEO David Solomon and Morgan Stanley CEO James Gorman (Getty)
Demand for private-label mortgages on the rise
Demand for private-label mortgages on the rise
Fannie Mae CEO Hugh Frater (Fannie Mae, iStock)
Fannie Mae to count rent payments toward mortgage approval process
Fannie Mae to count rent payments toward mortgage approval process
Shares of Rocket Cos and LoanDepot rose while shares Fannie Mae and Freddie Mac plunged after Supreme Court ruling (Unsplash)
For mortgage sector stocks, Fannie and Freddie ruling was positive
For mortgage sector stocks, Fannie and Freddie ruling was positive
Mark Calabria and Sandra Thompson (Getty, FHFA)
Biden ousts Fannie, Freddie overseer, leaving them in government’s hands
Biden ousts Fannie, Freddie overseer, leaving them in government’s hands
JPMorgan Chase CEO Jamie Dimon (Getty)
JPMorgan invests in private-label mortgage platform
JPMorgan invests in private-label mortgage platform
NewPoint Real Estate Capital CEO David Brickman (Photo via Freddie Mac)
Former Freddie Mac CEO’s new lending platform is here
Former Freddie Mac CEO’s new lending platform is here
Borrowers can now get a 30-year fixed-rate jumbo mortgage for $2 million at 2.65%. (iStock)
Jumbo mortgage lenders invade Fannie and Freddie’s turf
Jumbo mortgage lenders invade Fannie and Freddie’s turf
Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)
Fannie, Freddie say housing market could see slight hiccup
Fannie, Freddie say housing market could see slight hiccup
arrow_forward_ios

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

Loading...