Industry NewsMortgage

Democrats’ foreclosure plan: more leeway for Fannie, Freddie

Bush administration opposes bigger role for GSEs

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Democrats rolled out a plan Wednesday to address rising foreclosures that would temporarily increase caps on the loan portfolios of mortgage repurchasers Fannie Mae and Freddie Mac and provide more money for housing counselors. Comparing the impact of the housing downturn and upheaval in mortgage markets to Hurricane Katrina, top Democrats including Speaker Nancy Pelosi and Senate Majority Leader Harry Reid urged President Bush to appoint a special advisor to coordinate the government's response. For less than is spent in one day on the war in Iraq, they said, the government could provide housing counseling to nearly 130,000 families. Although Democrats proposed setting aside $200 million for foreclosure-prevention counseling, the heart of their plan relies on freeing up government-sponsored entities (GSEs) Fannie Mae and Freddie Mac to buy more mortgages. The Bush administration, which has made expanding Federal Housing Administration loan guarantee programs the centerpiece of its fo...