Fannie Mae and Freddie Mac will form a new joint company for securitizing home loans as a steppingstone toward reducing government involvement in the mortgage market, the regulator of the government-controlled companies said yesterday, Reuters reported. "The overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future," said Edward DeMarco, who is the acting director of the Federal Housing Finance Agency. Fannie Mae and Freddie Mac, which were bailed out by the government in 2008, help finance about two-thirds of new home loans. DeMarco is seeking to shrink them and reduce risks to the taxpayers who support the mortgage giants. Since they were seized by the government in the bailout, the companies have drawn nearly $190 billion from the Treasury to stay afloat. By creating a new securitization company, the Federal Housing Finance Agency intends to pave the way for a single securitization platform, forcing Fannie Mae and Freddie Mac to abandon their current separate systems. DeMarco said that the goal was to build a single infrastructure to support the mortgage credit business.
