Fannie-Freddie in Venture to Securitize Home Loans

Many people know Fannie Mae and Freddie Mac as government-sponsored enterprises that acquired high-risk mortgage loans and led to the financial crisis of 2008. Recently, these two entities announced that they will be forming “a new joint company for securitizing home loans” to lessen the government’s influence in the mortgage market. This may be one of many steps that these enterprises are taking to repay the government after the crisis several years ago. The regulator, Edward DeMarco, hopes to sell this company to policymakers in hopes of improving the housing market. After the bailout, these two entities took over approximately two-thirds of housing loans. These steps will help reduce their reliance on the Treasury for monetary support. The Federal Housing Finance Agency also hopes to unify Fannie Mae and Freddie Mac’s systems into one so that mortgages are handled on a single platform. With the government involved in these changes may lead to a more efficient system for the housing market.

Written by: Melody Mark

Source:

Reuters. “Fannie-Freddie in Venture to Securitize Home Loans.” New York Times. The New York Times, 4 Mar. 2013. Web. 5 Mar. 2013.