In “Modernizing Our Housing Finance System” — part of our Pieces of Home Year-End Home Sales Report — Virginia Senator Mark Warner explains how he, Senator Bob Corker (R-TN), and the other members of the Senate Banking Committee have introduced a “responsible and bipartisan blueprint to reform the federal government’s role in mortgage finance to make sure that taxpayers will not be asked once again to be the first responders.”
The bill would replace Fannie Mae and Freddie Mac with a new independent government agency to provide a government backstop for mortgage loans and that would create a common platform for the securitization of mortgages. A second agency would to purchase and securitize loans from member participants.
Our legislation acknowledges the critical functions of Fannie and Freddie, but introduces more appropriate taxpayer protection by requiring private sector capital to absorb significant losses before taxpayers,” Warner wrote. “We believe that Fannie and Freddie’s securitization, or issuance, role can be performed by other businesses, and can be done so in a way that is advantageous to smaller lenders that don’t benefit from the volume discounts that large banks receive.”
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