- Posted April 10, 2014 by
Mortgage Reform A Hot Topic For Lawmakers
Real estate analysts and law makers are debating the future of Fannie Mae and Freddie Mac; two federally controlled entities who are responsible for backing a large majority of loans in the nation. The 30-year fixed rate mortgage was a trusted standby for many years until the real estate collapse which ultimately resulted in recession. Some politicians are in favor of replacing Fannie and Freddie with a mix of private lending and government institutions. The proposed bill from Sens. Tim Johnson is expected to lead to lower risk for financial institutions but higher interest rates from borrowers.
Other politicians suggest restoring Fannie Mae and Freddie Mac as government sponsored enterprises operating in the public interst. The dismantlement of these two entities may lead to increased federal regulation concerning PMI (private mortgage insurance). Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) introduced the Housing Finance Reform and Taxpayer Protection Act of 2013, which would wind down Fannie Mae and Freddie Mac over five years, replacing them with a new government agency, the Federal Mortgage Insurance Corporation ("FMIC"). U.S lawmakers have yet to come to a solution since the federal conservatorship of Fannie and Freddie since 2008.