Home » Markets » Fannie Mae and Freddie Mac to rein in risky mortgages
Fannie Mae and Freddie Mac to rein in risky mortgages
Fannie Mae, Freddie Mac IPO could be whopping $150 billion to $200 billion: Sources
FOX Business’ Charlie Gasparino discusses the Federal Housing Finance Agency’s reported decision to select a Wall Street financial adviser on the massive Fannie Mae, Freddie Mac IPO.
The federal agency in charge of Fannie Mae and Freddie Mac wants the mortgage giants to reduce their exposure to risky loans, intended to make homeownership more affordable, in order to be prepared for a possible economic downturn.
Continue Reading Below
At the behest of the Federal Housing Finance Agency, the two companies are scaling back the proportion of loans they back to borrowers with small down payments and mortgages to deeply indebted borrowers, according to The Wall Street Journal, which first reported the news.
The FHFA did not immediately respond to FOX Business’ request for comment.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Reining in risk could limit their defaults and producer bigger profits, possibly helping the firms appeal to investors as the FHFA looks to take both companies public — something that will require billions of dollars in funding.
“Some of this really is a reflection of the increased emphasis and focus on: let’s do what we need to do to get out of conservatorship,” FHFA director Mark Calabria told the Journal.