“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.”
Read full American Banker article here.