The Obama plan: Goldilocks, Fannie, Freddie and FHA

Finding a 'just right' mortgage market fix

Are we heading toward a Goldilocks solution for Fannie Mae and Freddie Mac? And if so, what does that really mean for consumers and real estate professionals?

The Obama administration’s much-delayed "white paper" on housing finance reform — nearly two years in the making — turned out to be just 31 pages that essentially said: Total privatization of the home mortgage market won’t suit us. (Too hot.) Total nationalization of the market won’t, either. (Too cold.) But something in between — well, you know the story — should be just right.

Because of its diminutive size and lack of specificities, it’s easy to dismiss Obama’s report to Congress last week. But the administration’s emphasis throughout on the need to reduce the federal government’s footprint in the mortgage market was an important message to Republicans in the House and Senate: We can work with you.

We’re prepared to resist consumer groups and others who want us to simply "fix" Fannie and Freddie rather than to kill them. We can wind down both companies within as little as five years, and do a lot more between now and then to slash the size of federal programs along the way.