President Obama will introduce a plan to create a new housing system on Tuesday.
The new system will offer more people access to 30-year mortgages, and would replace current government sponsored enterprises Fannie Mae and Freddie Mac, which the President has previously tried to end. The system would have partial backing from the government, and make is so that the private capital of investors, banks and other firms will be what takes the losses if a borrower can’t pay. Only in an event like the previous housing disaster would taxpayer money be used to pay off the debt. Obama is also expected to call on Congress to give more Americans the opportunity to refinance, especially those homeowners who owe more than what their home is worth, reports The Washington Post.
“The current housing finance system, where the government guarantees more than 80 percent of all mortgages through Fannie Mae and Freddie Mac and F.H.A., is unsustainable,” an unidentified senior administration official, told The New York Times.
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