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Republicans Back Fannie Mae Freddie Mac Merger

July 8th, 2011 | No Comments | Posted in News

As the federal government continues to work to stabilize the mortgage market, Representative Gary Miller has proposed a plan that would combine Fannie Mae and Freddie Mac into a mortgage superpower. The company would still be owned by the federal government, but it would finally be in a position to find new investors and start turning a profit again.

Now that the US Federal Reserve is considering raising interest rates and President Barack Obama has put a cap on federally backed loans, both Freddie Mac and Fannie Mae need to make considerable changes. Some of Miller’s constitutes have already already argued against the proposed merger, and Congress is yet to vote on the issue. Although Freddie Mac and Fannie Mae serve the same group of consumers, combining them into one company could cause unforeseen circumstances.

Mortgage rates are still at a historical low, and banks are now lending to applicants that have sub par credit scores. In order to keep the housing market afloat, the Feds have to continue to approve loans. With $138 billion in taxpayer funds on the table, the state of the US economy hangs on the future of Fannie Mae and Freddie Mac.

Republicans have stated time and time again that privatizing the mortgage industry will help to bolster the economy. Democrats believe that Fannie Mae and Freddie Mac simply need more time. Adding more jobs to the market and keeping interest rates low is their main focus, but the upcoming vote in Congress will decide the fate of the mortgage market.