A bill was recently introduced in the Senate that could result in the wind-down of Fannie Mae and Freddie Mac. Under the bi-partisan “Housing Finance Reform and Taxpayer Protection Act of 2013”, recently introduced by Senators Bob Corker (R-TN) and Mark Warner (D-VA), Fannie Mae and Freddie Mac would be replaced by a new agency, the Federal Mortgage Insurance Corporation (the “FMIC”), tasked with operating a Mortgage Insurance Fund to provide a limited, government-backed guarantee on qualifying, privately issued mortgaged-back securitizations.
While the bill remains in its infancy, it would create a fundamentally new approach to the mortgage finance market within five years after enactment. The FMIC would replace the purely public securitization market currently utilized by the GSEs with a public-private alternative. Dechert will be keeping a close eye on this bill as it progresses through Congress and its potential to dramatically alter the level of government involvement in the mortgage market.
For more information on the Housing Finance Reform and Taxpayer Protection Act of 2013 and its potential impact on the residential mortgage securitization market, check out this Dechert OnPoint.