With housing on the mend, Obama pitches mortgage reform
PHOENIX — Buoyed by an improving housing market, U. S. President Barack Obama on Tuesday proposed a broad overhaul of the nation’s mortgage finance system, including winding down governmentbacked Fannie Mae and Freddie Mac. He declared that taxpayers should never again be left “holding the bag” for the mortgage giants’ bad bets.
Obama outlined his proposals in Phoenix, the once foreclosure-riddled city at the epicentre of the U. S. housing crisis. The housing market in Phoenix, as well as in many other parts of the country, has rebounded robustly, with prices up 66 per cent from the low point in 2011.
Despite the nationwide gains, the president said sweeping housing reforms are still needed to ensure that a rejuvenated market doesn’t simply “re- inflate the housing bubble.” The cornerstone of that effort is winding down Fannie Mae and Freddie Mac, a proposal with bipartisan support in the Senate.
Obama wants to replace Fannie and Freddie with a system that would put the private sector, not the government, primarily at risk for loans. The government would still be involved, both in oversight and as a last- resort loan guarantor.
He is also seeking guarantees that a private sector- led mortgage finance system would still ensure wide homeowner access to popular 30- year mortgages at fixed rates.
Fannie and Freddie were bailed out in 2008 by a $ 187billion taxpayer- backed bailout.