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Treasury Unveils Plan To Privatize Freddie Mac, Fannie Mae

The Trump Administration has released its plan for privatizing the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Treasury officials say designed to protect American taxpayers against future bailouts, preserve the 30-year fixed-rate mortgage, and help Americans fulfill their goal of buying a home.

Administration officials said the plan is necessary to make both agencies more “effective and efficient.” They also want to avoid another bailout of the agencies similar to what happened after the recession in 2008.

USA Today reports 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.

In a statement, Treasury Secretary Steven Mnuchin said, “The Trump Administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home. An effective and efficient federal housing finance system will also meaningfully contribute to the continued economic growth under this Administration.”

During the development of the plan, the Treasury Department met with a wide range of stakeholders including affordable housing advocates; broker-dealers; investors; mortgage lenders, servicers, and insurers; think tanks; trade associations; and other interested parties.

Click on the photo above to see the complete privatization plans.

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