On Thursday, May 20, two lawmakers introduced a proposal to the U.S. Senate that aims to replace Fannie Mae and Freddie Mac with at least five private companies that would provide mortgage-backed securities.
The proposal is seen as a compromise between Republicans that had wanted a private mortgage-finance system and Democrats who were in favor of the current model.
Both Fannie Mae and Freddie Mac became government controlled in 2008 as the recession swept the nation and caused significant mortgage losses. With the housing market never fully recovering, many lawmakers weren't in favor of replacing the current mortgage system, fearing a similar collapse.
The new proposal, however, might have some traction, as experts close to the case believed the new bill might be the only method for attracting support on both sides.
"Rather than putting out a political marker, we can move a piece of legislation that is significant … and can actually become law," Representative John Campbell, a Republican from California, told the Wall Street Journal. "The only other approach that's out there in a bill is one that replaces Fannie and Freddie with nothing."
For the Houston real estate market, among others, the new mortgage system might provide a boost. However, unless the bill is passed, only speculation exists.
Courtesy of 2M Realty News