Feds consider money-saving Fannie, Freddie change

10/17/2014

Feds consider money-saving Fannie, Freddie change

WASHINGTON – Oct. 16, 2014 – A change in policy for Fannie Mae and Freddie Mac could save taxpayers a lot of money. The Federal Housing Finance Agency (FHFA) is currently seeking comments on the proposal.

The proposal: Make the mortgage security documents issued by Fannie Mae and Freddie Mac – the paperwork that gives the lender legal rights to a property if a borrower fails to pay – the same.

In practice, the change would be a large, multi-year task.

In a letter to FHFA backing the change, Financial Services Roundtable President John Dalton said: "A single security would benefit the housing finance market, consumers, investors and taxpayers. A single security would minimize, if not eliminate, some of the pricing inefficiencies in the market and save taxpayers hundreds of millions of dollars per year, which Freddie Mac currently pays to originators in order to maintain market share."

The Roundtable recommended that FHFA move quickly because it would "help the process of easing new entrants into the market."

The Roundtable's letter also stressed a gradual transition period to "ensure that the transition to a single security is conducted properly and does not disrupt the market for agency mortgage backed securities."

For more information on the proposal, visit FHFA's website.

The complete Financial Services Roundtable letter backing the change can also be read online.

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