Feds look to decrease size, impact of Freddie and Fannie

The White House has announced the start of an initiative that will ultimately limit the size and scope of Fannie Mae and Freddie Mac - the government's two housing lending bodies that were the target of widespread ire during the depths of the recession. According to The Wall Street Journal, the major mortgage lenders guarantee lending up to $729,750, including lending in high-priced neighborhoods where houses have retained such value. The paper reports that the Obama Administration wants to cut that ceiling to $625,500 by October 1. Bloomberg reports that Housing and Urban Development Secretary Shaun Donovan, whose agency oversaw the report laying out future planning, hopes changes will have an effect that will eventually lead to the phasing out of Freddie and Fannie in the housing market. "This is a plan for fundamental reform, to … strengthen consumer protection and preserve access to affordable housing for people who need it," Treasury Secretary Timothy Geithner said in the report, according to Bloomberg. The New York Times reports that the federal government has spent $135 billion propping up the mortgage giants since 2008. The paper reports that both agencies may need $19 billion in additional funding over the next three years.