Franken's new bill would ban Fannie/Freddie from betting against homeowners
Franken wants Fannie/Freddie to put their money where their mouth is.
Today, Senator Franken plans to introduce legislation that would help more homeowners refinance their home mortgages, saving them money and, in some cases, helping them keep their homes.
Franken's Helping Homeowners Refinance Act comes on the heels of a ProPublica/NPR News report detailing how Freddie Mac's investment portfolio includes "multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates." Those bets are in tension with the mortgage giant's mission to create affordability in the housing market.
Franken's legislation would prohibit the Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, from making investments that create disincentives to help homeowners.
In a press release, Franken says:
The federal government should be making it easier for homeowners to refinance their mortgages, not creating additional hurdles for banks and homeowners. It's time for Fannie Mae and Freddie Mac to stand up and honor their obligation to American homeowners. This legislation would make it easier for homeowners to refinance, saving them money and helping them keep their homes.
As the ProPublica/NPR report details, Freddie Mac, in addition to being a taxpayer-owned instrument of government policy dedicates to making home loans more accessible, also manages billions of dollars of investments. The financiers managing those investment are walled-off from the policy arm of the company, making it possible for Freddie Mac's traders to make conflict-of-interest bets. Franken's legislation would break down that wall and prevent Fannie and Freddie from wagering against the homeowners they're supposed to help.
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