Two senators draft plan to phase out Freddie Mac and Fannie Mae


“This is another step toward reform, but we are still years away from having either the legislative capacity or market willingness to embrace a new mortgage finance system,” said Isaac Boltansky, a policy analyst with Compass Point Research and Trading.
 Under the proposal, Fannie Mae and Freddie Mac would be wound down and replaced with a new government reinsurer called the Federal Mortgage Insurance Corporation, which would provide assistance only after private creditors had taken a hit. The entity would be financed by fees on lenders who want the government backstop.
 Included in the outline is a mandate that strong underwriting standards be built into the new system. It would also require a 5 percent down payment for all but first-time buyers, although that requirement would be phased in. Some consumer and housing advocates worry that a system with rigid down payments will prevent less affluent Americans from accessing credit even if a limited government role is retained