The Obama administration has proposed to “wind down” government funding for Freddie Mac and Fannie Mae in a new Treasury Dept. report that outlines plans to reform the US housing finance market.
In a report to Congress, the Treasury Department and the Department of Housing and Urban Development recommended that the government shrink its “footprint in housing finance on a responsible timeline” for mortgage giants Freddie Mac and Fannie Mae.
Additionally, the proposal details plans for improving the private mortgage lending market with “stronger consumer protection, increased transparency for investors, improved underwriting standards, and other critical measures,” the Treasury Department said.
Fannie Mae and Freddie Mac already received $150 billion in bailouts during the subprime mortgage crisis in 2008, and lawmakers have increasingly called for the abolishment of both government-sponsored enterprises (GSEs).
“This is a plan for fundamental reform—to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it,” Treasury Secretary Tim Geithner said in a statement.
The Obama administration report said that the government should aim to pull out of the mortgage market gradually over the next several years.
Proposed reforms regarding Fannie Mae and Freddie Mac include diminishing their investment portfolios by more than 10 percent per year, and increasing prices at Fannie and Freddie to “help level the playing field for the private sector to take back market share.”
“We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” Geithner said.
In a report to Congress, the Treasury Department and the Department of Housing and Urban Development recommended that the government shrink its “footprint in housing finance on a responsible timeline” for mortgage giants Freddie Mac and Fannie Mae.
Additionally, the proposal details plans for improving the private mortgage lending market with “stronger consumer protection, increased transparency for investors, improved underwriting standards, and other critical measures,” the Treasury Department said.
Fannie Mae and Freddie Mac already received $150 billion in bailouts during the subprime mortgage crisis in 2008, and lawmakers have increasingly called for the abolishment of both government-sponsored enterprises (GSEs).
“This is a plan for fundamental reform—to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it,” Treasury Secretary Tim Geithner said in a statement.
The Obama administration report said that the government should aim to pull out of the mortgage market gradually over the next several years.
Proposed reforms regarding Fannie Mae and Freddie Mac include diminishing their investment portfolios by more than 10 percent per year, and increasing prices at Fannie and Freddie to “help level the playing field for the private sector to take back market share.”
“We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” Geithner said.
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