In a speech Tuesday, President Barack Obama will stress the need for a new housing finance system based on specific core principles that include putting private capital first, ending Fannie Mae and Freddie Mac’s “failed business model,” and ensuring broad access to the 30-year fixed rate mortgage, according to a fact sheet from the White House.
“Fannie
Mae and Freddie Mac should be wound down through a responsible transition, and
the government role during normal times should be no bigger than necessary to
achieve the principles laid out here,” officials stated in the fact sheet
released prior to the speaking event in Phoenix.
The
call to wind down the GSEs reflects separate housing finance reform bills
recently introduced by members of the Senate Committee on Banking and the House Committee on Financial Services. However, the bill from
the House would provide for a non-government nonprofit to replace the GSEs
rather than a government agency.
To
help responsible homeowners refinance, the president also backs three
proposals, which are to streamline refinancing for borrowers with
government-insured mortgages, waive closing costs for borrowers who refinance
into shorter terms, and expand eligibility for refinancing for those without
government-backed mortgage by creating special programs, according to the fact
sheet.
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