Industry Group Seeks To Split-Up Fannie Mae (FNM) and Freddie Mac (FRE)
According to reports from the Wall Street Journal, the Mortgage Bankers Association is asking Congress to break-up Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) into several smaller privately held companies.
The trade group is proposing a framework that would give successor entities to Fannie and Freddie the authority to create securities backed by certain types of mortgages. The new companies would guarantee the securities against defaults on the underlying mortgages. The new companies would also pay fees into a federal insurance fund, which would guarantee interest and principal payments to bondholders if the companies were unable to make them.
Link to WSJ Article
The trade group is proposing a framework that would give successor entities to Fannie and Freddie the authority to create securities backed by certain types of mortgages. The new companies would guarantee the securities against defaults on the underlying mortgages. The new companies would also pay fees into a federal insurance fund, which would guarantee interest and principal payments to bondholders if the companies were unable to make them.
Link to WSJ Article
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