The Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday.What will we do without the government subsidizing home buying? Oh, wait, there's still the home mortgage tax deduction.
The highly-anticipated "white paper," which is expected to be released Friday, will include three different options for reducing the role government plays in the mortgage market, the official said.
While the paper would mark an important development in the debate over what to do with Fannie and Freddie, a final decision by Congress is not expected any time soon.
After being rescued by the government in 2008, Fannie and Freddie have presented a major conundrum for policymakers in Washington.
The problem is that phasing out the two publicly traded companies could raise borrowing costs for homeowners and jeopardize the fragile housing market.
At the same time, Fannie and Freddie represent a major liability for taxpayers, who are on the hook for about $150 billion in federal aid the two institutions have received.
Anybody want to start the bidding on a pretty nice piece of Washington, DC real estate? It's probably not a good time to go job hunting there, though.