Bill to replace Fannie, Freddie with new housing-loan structure

Julie C. Nichols General

Reuters – Jason Reed

The top Democrat on the U.S. House Financial Services Committee on Thursday introduced a draft proposal to abolish Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) and create a new lender-owned cooperative that would issue government-backed loans.

Representative Maxine Waters of California outlined a measure that challenges the more conservative approach of the panel’s chairman. Texas Republican Jeb Hensarling’s proposal would sharply reduce the government’s role in housing finance.

The counterproposal is unlikely to gain broad support in the Republican-led House.

"Fannie Mae and Freddie Mac’s return to profitability and repayment of taxpayer dollars has led some to rightly speculate whether (they) need any reform at all," Waters said in a statement. "I am hopeful that this legislation will continue to move the conversation on housing finance reform forward."

The House bill maintains a clear government role is needed to sustain the popular 30-year, fixed-rate mortgage. The framework takes a similar approach to bipartisan measures already introduced in the Senate.

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