White House releases plans to wind down Fannie Mae and Freddie Mac
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JEREMY HOBSON: Now, let’s get to the report that just came out from the White House on the future of Washington’s role in the mortgage industry.
Marketplace’s David Gura is going through the report now and he’s with us live from D.C. David — what does the report say?
DAVID GURA: As you said, the goal of all this is to wind down Fannie and Freddie — and to get a housing market that’s much more stable. The administration says home buyers should have to put more money down. At least ten percent on every loan the government guarantees. They want to reduce the size of the loans they back. And thew lenders to do a better job of ensuring home buyers have enough money to pay their loans. Now, the White House stresses this should be done on “a responsible time line.” This report is filled with lots of cautious adjectives and adverbs: They want to do this carefully and responsibly.
Michael Barr was an Assistant Treasury Secretary. He thinks that, over time, the government could disentangle itself from the mortgage market.
MICHAEL BARR: I think if its done in a slow and measured way, it should be able to be absorbed by the marketplace without disrupting the housing recovery that we’re beginning to see now.
One last thing: there’s a caveat in this report. They say the goal should not be for all Americans to become homeowners. That should be a goal for those who have a good credit history and who’s finances are secure.
HOBSON: Marketplace’s David Gura in Washington.
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