Treasury provides three options to replace Fannie, Freddie

As noted in the New York Times, they are offering three options to replace the bankrupt entities: The government would still provide insurance against default to borrowers of modest means, it.

Prior GSE support measures. Charitable activities will be reviewed. There will be financing and investing relationship with the U.S. Treasury via three different financing facilities to provide critically needed support to Freddie Mac and Fannie Mae, and also to the liquidity of the mortgage market.

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They would issue the Treasury $1 billion in preferred stock with a 10% dividend. Finally, they’d issue warrants for up to 79% of the companies to the Treasury. The boards had no choice. They agreed and were promptly dismissed. All told the U.S. Treasury extended $187.5 billion in loans to Fannie Mae and Freddie Mac.

Lawmakers are starting to wrestle with how to replace Fannie. government would provide to mortgage securities. At the moment, Fannie and Freddie’s debt does not have the same level of government.

 · So we may very well see Sammie or a bunch of Hoffins replace Fannie and Freddie in the years to come. Both options leave taxpayer subsidies in place for the mortgage market and could result in.

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The Treasury Department provided three options in its white paper Friday for a housing finance system to replace Fannie Mae and Freddie Mac. One of which is already being criticized for. that’s not a viable option.

 · Options; Investing Tools Stock. Fannie and Freddie’s Flex Modification to Replace HAMP. December 15, And it will provide borrowers who face permanent hardships with a.

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 · In exchange, Treasury would effectively guarantee all of Fannie and Freddie’s obligations, existing and newly issued. The reason for the structure of the bailout deal, including limiting the warrants to 79.9% ownership, was so the Treasury could keep asserting that the debt of Fannie and Freddie was not officially the debt of the United States, although de facto it was, is, and will continue to be.

Under option 3, Obama is proposing to replace Fannie and Freddie with private companies that would provide mortgage insurance. Those companies would then be forced to buy reinsurance from the government for all of the mortgages they guarantee.