Obama offers 3 vague alternatives for mortgage reform

In News on February 11, 2011 at 10:33 am

CBS Moneywatch has this summary of the Obama administration proposal for taking action to reform the government backed mortgage system of Fannie Mae and Freddy Mac.

There are three alternative plans in the administration’s proposal. The first would still provide insurance for some mortgages, but the role of Fannie and Freddie would be substantially reduced. The second and third proposals would only provide relief during crises when the mortgage market is threatened with failure, and are therefore likely to have the larger consequences than the first proposal.

Less government involvement in the mortgage market should help to ensure that banks have to manage their own risk instead of handing off all of their risk to the american taxpayer. Thats the good news.

The bad news, as always, is in the details which are, reportedly, TBD.

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