Administration unveils plan to privatize Fannie, Freddie

The Trump administration Thursday unveiled a longawaited plan to end federal control of two mortgage giants that were bailed out by taxpayers during the 2008 financial crisis and return them to the private sector.

The administration’s 49 recommendations to overhaul America’s housing finance system are unlikely to find an eager audience in Congress, which has been deeply divided on the issue and is consumed with other fights in the run-up to the 2020 elections.

But the proposal could accelerate the administration’s attempts to privatize the mortgage giants, Fannie Mae and Freddie Mac, which collectively backstop a little less than half of the nation’s $11 trillion mortgage market.

The plan — released by the Treasury and Housing and Urban Development departments — was ordered up by President Donald Trump in the spring, more than a decade after the government took over the mortgage giants at the height of the financial crisis. It includes recommendations meant to limit the federal government’s role in the mortgage market and inject more private competition into it. Officials say it would promote affordable housing and protect taxpayers from bailing out Fannie and Freddie in the event of another housing crash.

But releasing Fannie Mae and Freddie Mac from their federal embrace has proved politically difficult because the entities effectively subsidize the 30-year fixed-rate mortgages that are most popular among American homebuyers.

Advocates for affordable housing have warned that returning the firms to the private market could threaten those mortgages or make them more expensive and more difficult to obtain for low-income homebuyers.

Administration officials insisted that their plans would create more competition in housing finance and would reduce costs for borrowers, not raise them.