Republicans in the House of Representatives have announced their plan to overhaul and unwind Fannie Mae and Freddie Mac. House republicans will introduce a series of eight bills to hasten the federal government’s departure from the mortgage market, a move that acknowledges a single major piece of housing legislation would be unlikely to advance. Key highlights include:
- Capping the GSEs’ maximum portfolio size at $700 billion and gradually reduce that cap to $250 billion over five years.
- Repealing the GSEs’ affordable housing goals.
- Gradually raising the GSEs’ guarantee fees in an effort to lure private capital back into the market. This provision is currently endorsed by the Obama administration.
- Suspending current compensation packages for Fannie and Freddie senior executives and require compensation similar to the pay of other senior federal employees.
- Requiring the inspector general of the GSEs’ regulator to submit quarterly reports to Congress during the firms’ conservatorship.
- Requiring mortgages held or securitized by Fannie and Freddie to adhere to the same risk retention requirements mandated in last year’s regulatory overhaul (PL 111-203).
- Prohibiting Fannie and Freddie from engaging in any new activities or businesses, something the GSEs’ regulator is already currently preventing them from doing.
- The proposal was presented by Representatives Jeb Hensarling (R-Tex.), Ed Royce (R-Calif.), Randy Neugebauer (R-Tex.), Spencer Bachus (R-Ala.), Judy Biggert (R-Ill.), Scott Garrett (R-N.J.), David Schweikert (R-Ariz.) and Steve Pearce (R-N.M.).