Two U.S. senators working on a bipartisan overhaul of Fannie Mae and Freddie Mac are seriously considering a plan that would break up the mortgage-finance giants, according to people with knowledge of the matter.
The proposal by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner would attempt to foster competition in the secondary mortgage market, where loans are packaged into bonds and sold off to investors, said the people.
Two U.S. senators working on a bipartisan overhaul of Fannie Mae and Freddie Mac are seriously considering a plan that would break up the mortgage-finance giants, according to people with knowledge of the matter.
The proposal by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner would attempt to foster competition in the secondary mortgage market, where loans are packaged into bonds and sold off to investors, said the people.
One long-stated desire for some politicians on both sides of the aisle has been to end Fannie and Freddie’s duopoly, partly due to concerns that their size encourages taxpayer rescues if they run into trouble. After seizing the companies nine years ago, the government injected $187.5 billion into them.
To lower the barriers to entry, lawmakers and regulators have suggested letting private competitors use some of Fannie and Freddie’s infrastructure, such as the intellectual property the companies use to securitize mortgages or the data they rely on to determine whether one loan is riskier than another.
