US seeks to overhaul Fannie, Freddie

Bloomberg News / July 28, 2010

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WASHINGTON — The Obama administration plans an Aug. 17 conference to discuss ways to fix the country’s “broken’’ housing-finance system and intends to submit a proposal by January to overhaul Fannie Mae and Freddie Mac.

“The future of our housing-finance system is critical not only to our economic recovery, but also to millions of American homeowners in every corner of our country,’’ Treasury Secretary Timothy F. Geithner said.

Falling home prices, easy availability of credit, and government policies promoting homeownership pushed Fannie Mae and Freddie Mac to the brink of collapse in 2008. The Treasury seized them and has spent $145 billion to keep them solvent.

The administration wants a “comprehensive reform proposal that protects taxpayers, institutes tough oversight, restores the long-term health of our housing market, and strengthens our nation’s economic recovery,’’ he said.

The review will include Fannie Mae, Freddie Mac, the Federal Housing Administration, Ginnie Mae, the Federal Home Loan Banks, and a “significant private sector role’’ in originating, funding, and servicing mortgages.