Call to close Fannie and Freddie

The US Mortgage Bankers Association (MBA) has urged the government to replace twin mortgage lenders Fannie Mae and Freddie Mac with a group of private firms issuing mortgage bonds backed by the state. The MBA’s plan would see federally regulated private firms known as Mortgage Credit Guarantor Entities – nicknamed “McGees” – purchase loans, sell them on as guaranteed bonds and pay the state for its support. MBA president John Courson said that an “explicit government backstop” was needed to restore confidence to the US mortgage market.