Obama moves to privatise US mortgages

The Obama administration is poised to release long-awaited proposals for reducing government support of the mortgage market, but Congress will choose the path for reforming financially teetering housing finance giants Fannie Mae and Freddie Mac.

The Treasury Department is scheduled to release a report Friday that lays out three choices for winding down Fannie and Freddie and moving to a more privatized mortgage market, according to a number of people familiar with the administration's approach. The 20- to 25-page report will not endorse any of the options – a decision by the administration designed to provoke a discussion about the role of government in housing finance without roiling the housing market or locking President Barack Obama to a particular solution.

Presenting the choices in Goldilocks fashion, the report's scenarios are:

-No government role, except for existing agencies like the Federal Housing Administration.

-A government role that explicitly guarantees mortgages only when the market is in trouble.

-A government role at all times, though not through government supported entities like Fannie and Freddie.

Source: Associated Press