By Joe Light | The Wall Street Journal
A group including some of the chief architects of the Obama administration’s housing policy released a paper Wednesday outlining a new proposal for how to deal with mortgage-finance giants Fannie Mae and Freddie Mac.
The key takeaway: Instead of winding down Fannie and Freddie, the companies would be merged into a government-owned corporation that would take over the responsibilities of buying mortgages, wrapping them into securities and guaranteeing investors against default. That’s the core of the housing finance system that helps to make 30-year fixed-rate mortgages possible in the U.S. but not elsewhere.
