Senators to Introduce Bill to End Fannie Mae, Freddie Mac - Bloomberg

Senators to Introduce Bill to End Fannie Mae, Freddie Mac - Bloomberg

According to the latest draft of the bill, Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac would be liquidated within five years. The two companies package mortgages into securities on which they guarantee 100 percent payment of principal and interest on underlying mortgages.
The draft bill would require private financiers to take a loss of 10 percent of the principal underlying securities. Housing finance participants who have seen the draft have been critical of that “first-loss” provision, as it is referred to in the draft, saying it is too big a change from the current system.