WASHINGTON –A fund to help victims of the subprime mortgage crisis and a reform of Fannie Mae and Freddie Mac are key components of a bill passed by the Senate Banking Committee last week.
The measure, which passed 19-2, would create an affordable housing fund, paid for by Fannie Mae and Freddie Mac. The fund would provide $500 million for foreclosure rescues in the first year. The measure also tightens regulations of Fannie and Freddie, the main purchasers of mortgages from credit unions. It creates a new regulatory entity, the Federal Housing Finance Agency, which could order Fannie and Freddie to increase their capital. Some lobbyists for credit unions have expressed concern that if Fannie and Freddie were required to keep too much capital on hand, it would make less money available for them to purchase mortgages.
Fannie and Freddie currently hold combined capital of $83 billion but have considerable debt. Recently, Fannie Mae announced a $2.2 billion loss for the first quarter. Freddie Mac announced that it lost $151 million.
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