Fannie, Freddie Wind-Down Raises Liquidity Worries

Law360, New York (February 7, 2012, 7:47 PM EST) -- The Obama administration has proposed winding down mortgage financing entities Fannie Mae and Freddie Mac in an effort to stimulate private investment in the housing sector, but experts worry about how the resulting liquidity gap in the mortgage market would be filled.

Fannie and Freddie have served as a vital source of financing for more than 40 years by buying and securitizing mortgages on the secondary market, providing capital for banks to make new loans to qualified homeowners.

But following the financial crisis, calls for reforming...
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