“The two firms, which back nearly half of all new U.S. home loans, were chartered by Congress to expand mortgage finance but operated as private, profit-making companies. Given the central role they played in the financial system, the government felt compelled to bail them out when they ran into trouble. The bill would require private entities to buy mortgages from lenders and issue them to investors as securities. Private equity would be required to absorb a 10 percent loss of the principal underlying those new mortgage-backed securities if the loans went bad. A new guarantor, called the Federal Mortgage Insurance Corp., would replace Fannie Mae and Freddie Mac.”
http://www.reuters.com/article/2013/06/25/us-usa-housing-reform-idUSBRE95O0WI20130625
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