Trump Administration unveils plan to privatize Fannie, Freddie

WASHINGTON - OCTOBER 21: The headquarters of Fannie Mae are seen October 21, 2010 in Washington, DC. The Federal Housing Finance Agency announced today that U.S.-backed mortgage firms Fannie Mae and Freddie Mac, which have already required $148 billion in bailouts, may now need up to $363 billion in taxpayer-funded Treasury Department aid under worst-case scenarios. (Photo by Win McNamee/Getty Images)

WASHINGTON — The Trump administration has unveiled its plan for ending government control of Fannie Mae and Freddie Mac, the two giant mortgage finance companies that nearly collapsed in the financial crisis 11 years ago and were bailed out at a total cost to taxpayers of $187 billion.

The administration’s plan calls for returning Fannie and Freddie to private ownership and reducing risk to taxpayers. That while preserving homebuyers’ access to 30-year, fixed-rate mortgages, a pillar of housing finance. The Treasury Department published the plan Thursday and submitted it to President Donald Trump, who called for it in March.

While not prominently in the public eye, the two companies perform a critical role in the housing market. Together they guarantee roughly half of the $10 trillion U.S. home loan market.

Fannie and Freddie, operating under so-called government conservatorships, have become profitable again in the years since the 2008 rescue and have repaid their bailouts in full to the Treasury.

The administration initially looked to Congress for legislation to overhaul the housing finance system and return the companies to private shareholders. But Congress hasn’t acted, and now officials say they will take administrative action for the core change, ending the Fannie and Freddie conservatorships.

The new plan would make the companies privately owned yet government “sponsored” companies again. Their profits would no longer go to the Treasury but would be used to build up their capital bases as a cushion against possible future losses.

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