Two senators are seriously looking at a plan that would split Freddie Mac and Fannie Mae into single-family and multifamily parts.
Tennessee Republican Bob Corker and Virginia Democrat Mark Warner have devised the plan, Bloomberg reported, citing sources. Both senators are working on a bipartisan overhaul of the mortgage giants, according to the publication. The aim is to create more competition in the secondary mortgage market, the sources said.
Many Democrats and Republicans have said they want to end Fannie and Freddie’s duopoly. Since the government took control of the giants in 2008, it has spent $187.5 billion on them. Overhauling the system is said to be a priority for the White House, and the Senate Banking Committee is looking to reduce the government’s role in the $10 trillion mortgage market.
Both senators are members of the committee, which is scheduled to hold another hearing on housing finances later this month. Among Warner and Corker’s proposals is to split Fannie and Freddie’s single-family businesses from their multifamily business, which finance apartment rentals. The single-family business may then be divided into even smaller companies, the sources told Bloomberg.
Last week, Warner told the Mortgage Bankers Association conference that he and Corker have agreed on a number of matters, including developing a system that preserves the 30-year mortgage. [Bloomberg] — Miriam Hall