In a speech delivered yesterday before the National Association for Business Economics' 29th Annual Economic Policy Conference, DeMarco announced plans for a ‘new business entity [that] will be established between Fannie Mae and Freddie Mac.’ The new entity, which has yet to be named, will not be designed along the schematics of the existing government-sponsored enterprises.
‘We believe that setting up a new structure that is separate from the two companies is important for building a new secondary mortgage market infrastructure,’ DeMarco said. ‘Our objective, as we stated last year, is for the platform to be able to function like a market utility, as opposed to rebuilding the proprietary infrastructures of Fannie Mae and Freddie Mac. To make this clear, I expect that the new venture will be headed by a CEO and chairman of the board that are independent from Fannie Mae and Freddie Mac.
‘It will also be physically located separate from Fannie Mae and Freddie Mac,’ DeMarco added. ‘Importantly, we plan on instituting a formal structure to allow for input from industry participants.’
DeMarco stated that the new entity would be ‘initially owned and funded by Fannie Mae and Freddie Mac, and its functions are designed to operate as a replacement for some of their legacy infrastructure.’ However, he did not provide a specific budget for this entity, nor did he say what role Congress would play in its funding.
‘The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future,’ he added. ‘We are designing this to be flexible so that the long-term ownership structure can be adjusted to meet the goals and direction that policymakers may set forth for housing finance reform.’