Critics say a new law introduced by Republican U.S. Rep. Jeb Hensarling, designed to advance the rate at which the portfolios for Fannie Mae and Freddie Mac are sold off, would severely limit the number of 30-year fixed-rate mortgages available in the U.S., according to a report from MartketWatch. Experts recently testified before Congress that returning Fannie and Freddie to the private sector would lead to a price increase most middle class families couldn’t begin to afford.
Republican lawmakers are eager to find a way to get Fannie and Freddie – which were nationalized in 2008 at the height of the mortgage meltdown – off the federal books, the report said. Already, the companies have cost taxpayers a combined $151 billion with more losses expected over the next decade.
“I am very concerned that those proposals, which would create fire sales of Fannie and Freddie portfolios, would only further depress loans values and reduce the returns to taxpayers of the current portfolios at Fannie Mae regardless of what cost accounting we use,” Rep. Chris Van Hollen, a Maryland Democrat, said at a recent hearing of the House Budget Committee, according to the site. “Those concerns are shared by many others.”
Fannie and Freddie have been bleeding money since being taken over by the government because they were forced to take on large amounts of toxic assets after a number of the nation’s major financial institutions failed in 2008.