HR 2413 – “Safe and Sound”: The Bill to Reform Fannie and Freddie?

We’ll see.

H.R. 2413, supported by the NAR, is billed as:

To establish a sustainable Federal Secondary Market Facility for Residential Mortgages that is financed by private capital, to terminate the conservatorships of Fannie Mae and Freddie Mac and repeal the charter Acts of such enterprises, and for other purposes.

I’m trying to make sense of the bill today. Generally, I’m inclined to distrust almost anything that is put forth by Congress in an attempt to “fix” the market.

My first read shows that the phrase “safe and sound” mortgage is going to be important over the coming days and weeks.What do you think?

Pay attention to the definitions of “Safe and Sound” mortgages.

The “TBA” part concerns me. Anything Congress does needs to be defined.


The purpose of this Act is to establish a Federal secondary market facility for residential mortgages, to provide that the operations thereof shall be financed by private capital, and to authorize such facility to–

(1) provide stability in the secondary market for residential mortgages;

(2) respond appropriately to the private capital market;

(3) maintain the secondary market for residential mortgages, including the ‘TBA’ (to-be-announced) market;

(4) improve the distribution of investment capital available for residential mortgage financing and as a result facilitate access to mortgage credit to qualified borrowers throughout the United States (including in central cities, rural areas, high-cost areas, and underserved areas); and

(5) manage and liquidate the mortgage portfolios of Fannie Mae and Freddie Mac in an orderly manner, in a way that contributes to the stability of the housing market and with minimum loss and maximum profit to the Federal Government.

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