The Obama administration’s long-awaited proposal for reforming the U.S. mortgage market calls for shuttering both Fannie Mae and Freddie Mac over a period of five years or more. The two agencies, along with the Federal Housing Administration, currently provide more than 90 percent of housing finance, according to a Washington Post report on Obama’s plan .
In a white paper released this morning, the Obama administration broadly outlines three options for replacing Fannie and Freddie:
Regardless of the proposed plan, Obama warned that any mortgage-market reform would most likely lead to higher mortgage rates, higher fees and down payments for home loans, and the potential for reduced availability of the 30-year fixed rate mortgage.
Other discussion points of the proposal: