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FBN's Liz MacDonald on Fannie Mae and Freddie Mac building a new joint company for securitizing home loans.
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You look at a merger of the mortgage bond business and two giants Fannie Mae and Freddie Mac.
And up raising mortgage rates for you -- get the bottom line from Elizabeth MacDonald.
On the street is -- about half a percentage point at leases what you mortgage rates could go up.
Here's a plan right now here's that the government overseer Ed DeMarco saying about merging the bond units at Fannie and Freddie he's saying essentially we -- -- create something that could be sold he's also saying.
It could be used as a foundation of the mortgage market.
All of the future so big planned and underway at the bipartisan policy center housing commission run by former senators George initial.
Mel Martinez and former -- director Henry Cisneros they want to wind down and break up Fannie Mae Freddie Mac.
Their balance sheet and turn them into mega -- government bond insurers so this is a sea change.
And housing policy for big government and -- the thirty year loan rate could go the loan can go away -- in Denmark is the only -- country the world has a thirty alone.
And here's why mortgage rates could go -- now this is a five year plan it could happen in ten years it could be GOP opposition.
But here's a future of Fannie and Freddie a big government bond -- they -- charge fees for government backing of just some bonds not mortgages.
And the new Fannie Freddie company would for the first time that the -- state.
And local taxes they also have to file.
For the first time SEC registration documents documents that bank regulatory commissions.
So again this is romance to a huge change in the future of these government owned entity guys and this is the first step -- the buying unit is the first of Banja as a first step them.
And given the fear everyone has of too big to fail if they ever manage to do this and why this could have a private think it would get bought by somebody would -- -- and they may.
That's a great question here's how it worked.
They would put the balance sheet up for a -- and touched by the way with these guys who are working on us housing commission they worked on -- for sixteen months they're talking to congress about it.
They were put the Fannie and Freddie balance sheet.
Up up for bid up for auction sold BlackRock -- Bank of America could bid on those parts of the balance sheet as those parts fit in with their own portfolios.
So let's say something Fannie Freddie still back about half of the mortgage market.
But if this takes place you can guarantee aside from the other interest rate pressures about rates going up with bond yields going up.
It's also -- at mortgage rates could go up if Fannie and Freddie are privatized that's a big I don't CBOs erasing nearly half percentage point.
If that happens let the free market rain baby and here we got it okay thinking on this -- sure.
