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Fannie-Freddie Plan Would Create Utilities, Add Competitors

  • Trade group’s proposal could require $200 billion in capital
  • Government would continue to back mortgage-backed securities
Aerial views of suburban sprawl in New Jersey, U.S., on Wednesday, June 10, 2015.
Photographer: Craig Warga/Bloomberg
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Fannie Mae and Freddie Mac would be turned into shareholder-owned utilities and face competition from new companies under a trade group’s mortgage-finance overhaul plan that could eventually require about $200 billion in private capital.

The Mortgage Bankers Association proposal released Thursday calls for the U.S. government to remain involved in the housing market, putting its guarantee behind mortgage-backed securities that the firms issue but no longer backstopping the companies themselves.