Fannie Mae-No Politics (FNMA)

[along4zride]

(FNMA) AND (FMCC) COUNTING DOWN LAST DAYS

I HATE TO TELL YOU THIS BUT:

Fannie Mae (FNMA) and Freddie Mac (FMCC) may be counting last days after a bill to wind down the government-sponsored enterprises (GSEs) and reform the mortgage finance market was proposed Thursday, according to a Delaney, Carney, and Himes press release. The bill proposes market-based pricing for loan guarantees and a different vehicle for mortgage insurance.

The legislation proposed by US House Democrats John Delaney, John Carney, and Jim Hines, known as “The Partnership to Strengthen Homeownership Act,” will create a new insurance program via the Government National Mortgage Association, better known as Ginnie Mae. The new insurance program will transfer the first 5% of losses related to mortgage risk to the private sector and anything over and above that will be shared by both the government and private insurers.

The Partnership to Strengthen Homeownership Act also proposes a standardized securitization platform to issue mortgage-backed securities through Ginnie Mae. The GSE will also have the authority to place lending standards and create stress-testing rules and capital standards for market participants.

According to the proposed bill, Fannie Mae and Freddie Mac will be wound down over the next five years and have their assets spun off to the private sector after repaying government investment. Fannie Mae and Freddie Mac have already paid back all of the taxpayer money they received in 2008-09 ($187 billion), as well as an additional 3%.