President Barack Obama speaks on home ownership for the middle class at Desert Vista High School on August 6, 2013 in Phoenix, Ariz.
President Barack Obama speaks on home ownership for the middle class at Desert Vista High School on August 6, 2013 in Phoenix, Ariz. - 

If you have a home mortgage, chances are Fannie Mae and Freddie Mac are involved. The two agencies own or guarantee about half of all U.S. home loans. Their fate has been up in the air since they cratered in 2008, sticking taxpayers with a $187 billion tab.

In a speech in Arizona Tuesday, President Obama proposed winding down Fannie and Freddie. He wants the private sector to take on more mortgage risk.

Unwinding the agencies involves tricky politics and tricky math, given thir prominence in the $10 billion U.S. home mortgage market. And, it would put most potential new home buyers in a very different world.

In a small corner of the mortgage market, that world already exists. Fannie and Freddie legally can’t guarantee single-family home loans over $417,000, except in high-cost areas. Folks at the president's speech can see that world inside the Arizona mortgage brokerage where Theresa Murrietta works. They need only ask her about jumbo loans.

“The interest rate is higher,” Murrietta explains. “Typically, you have to put a little bit more down. The guidelines for your income, asset and credit are a little bit stricter.”

Without Fannie and Freddie, the whole mortgage market could end up looking more like the jumbo market. It’ll be even tougher for home buyers than it is now, which freaks people out.

But home ownership would go on, in Arizona and across America.

“I don’t think it’s the sort of doomsday scenario people imagine it to be,” says Andra Ghent, a real estate professor at Arizona State University. “Other countries don’t have Fannie and Freddie.”

Yes, people outside America buy homes too. But financing -- where it’s available -- is quite different than here.

“Borrowers in other countries typically see shorter mortgages, mortgages that adjust as interest rates adjust,” says Jed Kolko, chief economist at the real estate website Trulia. “In other words, mortgages that shift more of the risk onto consumers.”

The 30-year fixed loan is the standard in America, but uncommon elsewhere. Here the hypothetical ends. President Obama is pledging to protect access to the 30-year fixed mortgage.

Private banks won’t take that risk alone. So there would have to be some role for government in backstopping home loans. Remove Fannie and Freddie and something else takes their place.

Follow Mark Garrison at @GarrisonMark