Steve Dibert, MFI-Miami
FHFA Acting Director Ed DeMarco laid out a plan today to merge lending giants Fannie Mae and Freddie Mac into one entity and create a new GSE that could be eventually be sold off to private investors.
The Government Sponsored Enterprises or GSEs that hold nearly two-thirds of the mortgage notes in the U.S. was bailed out by taxpayers in 2008. Since then, they have drawn nearly $190 Billion from taxpayers to stay afloat.
FHFA plans on creating a single mortgage securitization platform. The entity would initially be a joint venture that is owned by Fannie Mae and Freddie Mac and as that entity grows it would force Fannie Mae and Freddie Mac to abandon their current systems which DeMarco claims is outdatedand merge into a single infrastructure to support the mortgage credit business.
In his presentation, DeMarco laid out FHFA’s goals 2013 which is start reducing Fannie Mae and Freddie Mac’s role in the housing financial system. The first stage of which is to shrink their business by 10% in multifamily homes.