Fannie Mae-No Politics (FNMA)

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Treasury’s GSE Plan Still a ‘Work in Progress.' No Balance Sheet Allowed ?

IMFnews ... Wednesday, Nov 8, 2017 .. By Paul Muolo ... [e-mail]



Although it’s still unclear when the Treasury Department will release its blueprint for resolving the epic conservatorships of Fannie Mae and Freddie Mac and reforming the housing-finance system, industry officials are sifting through the Trump administration’s tea leaves.

One source who claims to be familiar with Treasury’s thinking on the matter said a consensus is developing around a model where the government-sponsored enterprises re-emerge as “utilities” with little or no balance sheet and a huge emphasis on honing the common securitization platform for different products.

Under this model, Fannie and Freddie would continue to guarantee MBS backed by conventional mortgages and set pricing for secondary market transactions. Emphasis also would be placed on reducing the head counts at the two companies.

A guarantee fund would be developed to cover losses.

But will Congress take the blueprint and develop legislation around it ? It remains to be seen. And few in Washington are betting heavily on a consensus bill appearing next year.