Freddie Mac & Fannie Mae Joining Forces

1035775_money_in_god_we_trustFreddie Mac and Fannie Mae are teaming up to form a new company that will focus on securitizing home loans. This is part of an effort to reduce the role that the government plays in the overall mortgage market. Together, Freddie and Fannie finance 2/3 of all new home loans in the US. According to Edward DeMarco, acting director of FHFA, the goal is to “shrink [their] footprint and reduce risks to the taxpayers that support the mortgage giants.”

Remember, the two agencies have received almost $190 billion in bailout money from the US Treasury. The new combined effort will force each to abandon their own systems and reduce the role they each play in the housing market. “The new company will be structured as a joint venture that is owned by Freddie Mac and Fannie Mae. We are on a path to replace the outdated proprietary operational systems of Freddie and Fannie [that can] be turned into some form of a market utility.

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