House Passes Fannie Freddie Legislation

The U.S. House of Representatives passed legislation on Wednesday, that’s aimed at preventing the implosion of Fannie Mae (FNM) and Freddie Mac (FRE). It passed by a vote of 272 to 152. Fannie and Freddie together guarantee about $5 trillion in mortgages. In comparison, the total U.S. government debt is about $9.5 trillion.

As a result of the subprime mess, the existence of both companies was threatened. As it stands, they are now beginning to take over foreclosed houses with a higher value than the new mortgages that they guarantee.

Among highlights of the bill:

Fannie and Freddie can now underwrite mortgages up to $625,000.

The treasury will extend existing credit lines to both companies for 18 months.

The Federal Housing Authority can guarantee $300 bil. in new loans to help struggling mortgagees refinance.

$15 billion in new housing tax breaks that include a $7,500 credit for first time home buyers.

A new regulatory agency with tighter supervisory controls for Fannie and Freddie.