WASHINGTON–The Mortgage Bankers Association has put forth a proposal that would turn Fannie Mae and Freddie Mac into shareholder-owned utilities.
The proposal, which would open Fannie and Freddie to competition, could eventually require about $200 billion in private capital.
The Mortgage Bankers Association proposal released also calls for the U.S. government to remain involved in the housing market, putting its guarantee behind mortgage-backed securities that the firms issue but no longer backstopping the companies themselves.
The plan is the latest attempt to unwind Fannie and Freddie from government control. The two companies, which together back about half the $10 trillion mortgage market, have been operating under federal conservatorship for eight years.
“There are two options here for anybody in the process,” said MBA President David Stevens during a conference call with reporters. “You can kick and scream on how you want the game to be played differently or you can play the game. We’re staying in the game on this one.”
The Trump administration has said that housing finance reform is a priority.
Among the issues to be addressed is whether holders of Fannie’s and Freddie’s old common and preferred shares will see any value.