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Moody's: Government may replace Fannie, Freddie

Moody's: Government may replace Fannie, Freddie



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SALT LAKE CITY -- Bleak news for Fannie Mae and Freddie Mac: Moody's Investors Service says the government may have to wind down and replace the mortgage loan backers within 18 months.

The two mortgage backers have reportedly lost over $149 billion since 2007. Moody's says it would take over a decade for the two to be viable, stand-alone entities, so replacing the two seems likely.

Utah mortgage analysts say the next question is: What do you replace them with?

"You would believe they would come up with something to facilitate this because it's a huge, you know. There's a lot of money volume that goes through there and it's a huge driver to the economy," said mortgage analyst Al Bingham.

Regardless of what they replace Fannie and Freddie with, Bingham predicts it will be tougher to get a loan.

"You'd see more fees. I think you'd see higher interest rates for everyone," he said.

Bingham says fees would have to be increased to offset losses.

E-mail: pnelson@ksl.com

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Paul Nelson

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