LyrArc Article Gist
Proposals being considered by the Obama administration for overhaul of Fannie Mae and Freddie Mac. One proposal being considered is to keep Fannie and Freddie in a reduced role with safeguards such as an insurance pool of money created by a fee the firms would charge mortgage lenders and banks. The insurance pool would act as a fund to cover losses before the government stepped in. Another safeguard would be to require the firms to hold adequate reserves to cover potential losses. The earlier preferential advantage for Fannie where it ony needed to keep a fraction of the reserves banks had to keep would be eliminated. Under this proposal both firms would shrink their mortgage portfolios over coming years. The White House says it wants to see a winding down of Fannie and Freddie and let private capital be at the heart of a new housing system.
Proposals being considered by the Obama administration for overhaul of Fannie Mae and Freddie Mac. One proposal being considered is to keep Fannie and Freddie in a reduced role with safeguards such as an insurance pool of money created by a fee the firms would charge mortgage lenders and banks. The insurance pool would act as a fund to cover losses before the government stepped in. Another safeguard would be to require the firms to hold adequate reserves to cover potential losses. The earlier preferential advantage for Fannie where it ony needed to keep a fraction of the reserves banks had to keep would be eliminated. Under this proposal both firms would shrink their mortgage portfolios over coming years. The White House says it wants to see a winding down of Fannie and Freddie and let private capital be at the heart of a new housing system.
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Original article 8 minutes, gist 1 minute
Original article 8 minutes, gist 1 minute
