U.S. Senator Bob Corker has introduced legislation to unwind Fannie Mae and Freddie Mac, the mortgage companies that have drawn more than $150 billion in taxpayer aid since the 2008 subprime lending collapse.
In a press release, the Tennessee Republican said the bill introduced today is intended to start a conversation about how best to rebuild the U.S. housing market.
“We are no closer to transitioning Fannie Mae and Freddie Mac off government life support than the day the firms were taken under direct government control,” Corker said. “We’re introducing this bill to lay down a marker and get a conversation going that Washington has put off for far too long.”
The legislation is similar to a package of bills being considered by House lawmakers. The Senate Banking Committee has not scheduled a hearing on the bill.
Corker’s proposal would create a uniform legal structure for mortgage-backed securities, which would be regulated by the Federal Housing Finance Agency.
Under the legislation, borrowers would need a 5 percent downpayment and full documentation to qualify for a loan.
Fannie Mae and Freddie Mac, over the space of 10 years, would be required to reduce to zero the amount of principal they guarantee on mortgage-backed securities. Their patents and databases would be sold to private investors.
A separate bill from Corker and Senator Kay Hagan, a North Carolina Democrat, would establish a legal framework for covered bonds as another method of injecting money into the housing market. Senators Chuck Schumer, a New York Democrat, and Mike Crapo, a Republican from Idaho, co-sponsored the legislation.