Obama to Preserve Federal Mortgage Role

Tuesday, 16 Aug 2011 10:30 AM

By Newsmax Wires

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President Obama and a team of advisers are finalizing a proposal that would keep government involved in the nation's mortgage market, playing a significant role, The Washington Post reports.

The decision comes after meetings with Obama's top economic and housing advisers, who all favor maintaing the government’s role as an insurer of mortgages for most borrowers,  The Post reports.

Fannie Mae and Freddie Mac, the mortgage finance giants owned by the government, could survive in this scenario, although under different names and with new significant constraints, The Post reports.

The White House played down any such plan, but to preserve a major role for the government marks "a big milestone in the effort to craft a new housing policy from the wreckage of the mortgage meltdown and could mean a larger part for Fannie and Freddie than administration officials had signaled," the newspaper said.

According to the Post:

"The government could maintain a substantial role in various ways. These include restructuring Fannie and Freddie as public utilities overseen by a government regulator. The government would no longer guarantee their financial health, as in the past, but would continue to backstop the mortgage-backed securities they issue using loans made by private banks."


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