“Senate Banking Committee leaders released their highly anticipated legislation to overhaul the mortgage finance market Sunday afternoon, after announcing they had reached agreement on a plan last week.

“Sens. Tim Johnson, D-S.D., chairman of the committee, and Mike Crapo, R-Idaho, the ranking member, unveiled a comprehensive, 442-page plan to unwind Fannie Mae and Freddie Mac, building on earlier legislation introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., last summer.

“In place of the government-sponsored enterprises, the Johnson-Crapo plan would establish a housing finance market backed by a new housing finance regulator, the Federal Mortgage Insurance Corp., which would provide an explicit government guarantee for certain mortgage-backed securities. Private firms would be allowed to buy mortgages and sell the securities after putting up 10% in first-loss capital before any government guarantee kicked in. The FMIC would also establish standards for the securitization and underwriting requirements for loans that are part of any security.”

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