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Gov't Seeks Smaller Role For Fannie, Freddie

By: AP
By: AP
AP/CBS

AP/CBS

WASHINGTON (AP) -- The government regulator for Fannie Mae and Freddie Mac has submitted a plan to Congress that would shrink the mortgage giants' role in the housing market.

The Federal Housing Finance Agency's proposal for a leaner Fannie and Freddie would mean fewer mortgages are backed by the government. That could make buying a home more expensive because it would lead to higher interest rates.

Under the plan, Fannie and Freddie could also increase its prices to guarantee loans and establish agreements with private investors to take on added credit risk.

The Obama administration last year laid out three options to wind down the government's support for the mortgage market slowly. Rather than making a single recommendation, the administration will leave the decision to Congress.


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