Treasury to Roll Out Fannie, Freddie Reform Next Week

The U.S. Treasury Department is expected to announce an overhaul of Fannie Mae and Freddie Mac next week that will call for a significant reduction of their share of the U.S. mortgage market, CNBC has learned.

Massachusetts home
Massachusetts home

Sources tell CNBC that major elements of the Treasury plan include a call for an increase in the cost of government-backed mortgage insurance, essentially a hike in the fees charged to borrowers. Treasury is also expected to endorse a reduction of the government's share of the mortgage market, to less than 50 percent from the current 95 percent.

In addition, Treasury is expected to propose reducing the maximum size for mortgages guaranteed by the government, to $625,500 from the current $730,000. The limit was temporarily raised in September.

Sources cautioned, however, that changes to the plan could yet be made in the week before its release.

The long-awaited plan to restructure the two agencies, taken over by the government amid the financial crisis of 2008, was required as part of the Dodd-Frank reform bill passed last year.