Obama administration issued a report on February 11, 2011 that would sharply reduce the access to affordable mortgages and nudge to shring Fannie Mae and Freddie Mac that currently guarantees nine out of every ten mortgages. The report laid out three distinct options:
Option I: Would eliminate government guarantee for middle-income mortgages
Option II: Would offer guarantees to investors mostly in the time of distress
Option III: Would offer guarantees to a broad range of mortgages but with a caveat: lenders need to buy a guaratee from private insurers.
The report, prepared by the Department of Treasury and Department of Housing and Urban Development, aimed to preserve the access of low-income families to affordable mortgages. The report also asked for debate and discussion on mortgage interest deduction clause of tax code as it might divert investment from other sectors of the economy. Both agencies got flak from conservatives as federal government had to bail them out with the infusion of $135 billion in taxpayers money in the aftermath of 2008 housing crisis.
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