Plans to Reform Fannie Mae and Freddie Mac on the Horizon

Earlier this week President Obama announced his intent to drastically overhaul Fannie Mae and Freddie Mac.
“We’ve got to turn the page on this kind of bubble and bust mentality that helped to create this mess in the first place,” he said in an address at Desert Vista High School in Phoenix, Arizona on Tuesday. “We’ve got to create a housing market that is durable and fair and rewards responsibility for generations to come.”
In the face of a more secure housing market, President Obama stated that it was time to “wind down” the mortgage behemoths Fannie and Freddie, which were bailed out by the federal government five years ago.
On Wednesday, President Obama answered questions from users of the real estate website Zillow, outlining his vision that will put private lenders back in a place of greater financial responsibility.
“We’re actually confident that the private market can step in, do a good job, and the government can be a back stop so that we still have affordability and 30 year mortgages, but it’s not the dominant player,” said President Obama.
Congress is now considering bills that would phase out Fannie and Freddie over the next five years and shrink the government’s role in guaranteeing mortgage securities.
Massachusetts Representative Michael Capuano is a ranking Democrat on the House Financial Services subcommittee on housing and insurance. Brett Barry is an associate broker with HomeSmart in Phoenix, Arizona. They join The Takeaway to discuss what reform would look like and how Fannie and Freddie could be affected.