Representatives with the Mortgage Bankers Association said the most recent legislative attempt to reform government-sponsored entities Fannie Mae and Freddie Mac falls mostly in line with the trade group's own proposals.
California Representative John Campbell and Michigan Representative Gary Peters proposed a bill that would replace Fannie Mae and Freddie Mac with five private market companies, all of which would insure mortgage-backed securities in a process similar to the one the GSEs follow but would be forced to hold on to more capital and risk. In a statement, Michael Berman, chairman of the MBA, said his group favors the legislation because it closely mirrors his own "Council on Ensuring Mortgage Liquidity" proposal.
"MBA looks forward to working with the leadership of the House Financial Services Committee and Senate Banking Committee on comprehensive legislation that reforms our housing finance system in a way that encourages the return of private capital while also providing for a limited but explicit government role in backing the availability of affordable mortgage products through all market condition," said Berman.
Reports say the five companies in the lawmakers' proposal would not be allowed to originate mortgages, leaving those responsibilities to other private market lenders and reducing the government's presence in the writing and selling of home loans.
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