We told you about the plan to restructure Fannie Mae and Freddie Mac that was introduced by Virginia Senator Mark Warner and his Senate Banking Committee colleague Bob Corker (R-Tenn.). In fact — shameless plug — Sen. Warner outlined that plan for us in Pieces of Home, our Virginia Housing Market Report.

The committee took the Warner/Corker plan, made some tweaks, and ranking members Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) introduced it at a press conference.

The plan would replace Fannie and Freddie with a new agency called the Federal Mortgage Insurance Corp. The government would become the “insurer of last resort” as the New York Times put it; private investors would have to take the first losses and lenders would be required to maintain 10 percent private capital reserves. A one-tenth-of-a-percent fee would fund the government’s insurance plan.

The plan also sets a minimum down payment of 3.5 percent for first-time home buyers, and 5 percent for everyone else, and provides for a single platform for packaging mortgages into mortgage-backed securities.

NAR welcomed the proposal, but said it hasn’t changed its stand on what it wants to see in a restructuring of the secondary mortgage market. “Any restructuring of the secondary mortgage market must ensure a reliable and affordable source of mortgage capital for consumers, in all types of markets,” said NAR President Steve Brown.

A bill now needs to be formally drafted, voted on by the committee, (which is almost certain to pass it) and then sent to the full Senate.

Want to know more? Click here for the New York Times article.
Click here for the Johnson/Crapo press release.