Thursday, February 10, 2011

Fannie Mae, Freddie Mac Underwrite 95% Of New Mortgages

Luke Ford writes:

The plan is not in final form yet but expect it to announce a massive reduction of the government role in the mortgage market. Currently Fannie and Freddie underwrite 95% of new mortgages. This plan will call for reducing that to 50% in three years.

CNBC reports: Treasury is expected to propose reducing the maximum size for mortgages guaranteed by the government, to $625,500 from the current $730,000. The limit was temporarily raised in September.

Sources cautioned, however, that changes to the plan could yet be made in the week before its release.


What's most interesting about the debate on Fannie and Freddie is how similar the plans are to fix them. Whether you are a liberal or a conservative, the plan is to substantially reduce the government role in mortgages over the next three years.

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