The New Democrat Coalition is calling for the wind-down of Fannie Mae and Freddie Mac and more reliance on a private mortgage market.
The 43-member coalition, which is led by Reps. Jim Himes, D-Conn., and Gary Peters, D-Mich., on Friday issued eight principles for policymakers to consider for a reform of housing finance. They include preservation of the 30-year fixed-rate mortgage and a robust private market with limited government support.
"We need a housing finance system that preserves the American dream of homeownership and preserves access to affordable mortgages for middle-class families," Peters, a co-chairman of the coalition, said in a press release. "However, we also need reforms that reduce the risk to taxpayers and that create conditions for the private sector to play a larger role in the secondary mortgage market."
Additionally, any government guarantee, they argued, should only cover the securities, and any company issuing securities should be subject to strong regulation and be required to be well capitalized and capable of withstanding deep losses.
They also said any guarantee must also be explicit and priced in a way that fully accounts for the risk borne by taxpayers.
