Three Ways Obama's Mortgage Proposal Will Impact You

Fannie Mae and Freddie Mac mortgage offices
Fannie Mae and Freddie Mac mortgage offices

Imagine the scene if the Catholic Church tried to get rid of the Vatican, the enterprise that some say efficiently administers a worldwide organization but others call artificial, archaic and corrupt. In a 32-page white paper it released this morning, the White House proposed a similar remodel of the country's mortgage infrastructure, which would eliminate the similarly controversial and Vatican-esque institutions Fannie Mae and Freddie Mac over the next 5-7 years, almost certainly resulting in higher mortgage interest rates and fees, tighter lending guidelines and fewer mortgage options for home buyers and refinancers.

Fannie and Freddie are the Government Sponsored Enterprises (GSEs) that, along with the Federal Housing Administration, back over 90% of the home loans originated by America's lenders, freeing up the lenders' assets so they can continue to make loans and insuring mortgage investors when borrowers default.