The CBO Takes On Fannie Mae, Freddie Mac Reform

The Congressional Budget Office (CBO) has released a report analyzing the expected costs and consequences of the main alternatives to Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). A lot of its conclusions are straightforward, less government involvement in the secondary mortgage market probably means higher interest rates on home loans, but the CBO disputes the worst-case scenarios put out by some advocates of returning to private GSEs.

“Under any of the transitions that CBO examined, the agency expects that most borrowers...