Fannie Mae and Freddie Mac are issuing new mortgage bonds this year, which would transfer the risk of default to private investors on all but the safest mortgages, The Wall Street Journal's Joe Light reports. The hope is the new bonds will expand the market for home mortgages as well as prevent taxpayers from being on the hook if another mortgage crisis develops.
Light notes that almost all of the U.S. housing market currently depends upon guarantees from government-backed entities. But the Federal Housing Finance Agency, which regulates Fannie and Freddie, has set a goal for the companies to transfer most of the risk on new mortgages to private investors.
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