Fannie and Freddie to form new company

TRD New York /
Mar.March 05, 2013 11:00 AM

The government-backed mortgage giants Fannie Mae and Freddie Mac are abandoning their separate systems for  securitizing home loans and are forming a joint company that could be up and running as soon as next year, NBC News reported.

The consolidation is intended to help reduce the government’s role in the mortgage market, according to its  regulator, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, and will regulate the new company as well.

“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,” Edward DeMarco, the agency’s acting director, told the National Association for Business Economics.

Fannie Mae and Freddie Mac help finance about two-thirds of all new U.S. home loans. DeMarco is attempting to reduce that figure by creating a single infrastructure to support the mortgage credit business. To date, Fannie Mae and Freddie Mac have had to borrow $190 billion from the U.S. Treasury to  stay afloat. [NBC News]Christopher Cameron


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