Mortgage giant Fannie Mae has announced that Timothy J. Mayopoulos is now CEO of the government-sponsored company.
The announcement follows the January resignation of Fannie Mae's previous CEO, Michael J. Williams, and comes shortly after the company reported that it did not require a bailout for the first quarter of 2012. That was the first time that Fannie Mae (officially called the Federal National Mortgage Association) did not need government funds to help keep it afloat since the financial crisis in 2008, when it entered government conservatorship.
Mayopoulos (pictured at left) joined Fannie Mae three years ago, managing the company's communications and marketing, government and industry relations and human capital strategy. He has also led the company's strategies to improve the housing finance system.
As of early May, Fannie Mae had cost taxpayers $116.1 billion, and paid back $22.6 billion, according to HousingWire
The mammoth bailouts of Fannie Mae and Freddie Mac have outraged many Americans over the last five years, and policymakers on both sides of the aisle have called for reform. The two embattled companies currently gird the housing market, however, guaranteeing nearly two-thirds of U.S. mortgages.
They operate by purchasing mortgages from lenders that meet certain standards, and bundling them into packages, known as mortgage-backed securities. They then sell the packages to private investors.
Some experts say that an abrupt wind-down of the two companies could reduce mortgage options and cause mortgage rates to soar
, since private investors would not be willing to buy packages of mortgages that lack a government guarantee unless they pay higher yields.
The Federal Housing Finance Agency, which oversees the twin mortgage guarantors, has said that "no private sector infrastructure exists today that is capable of securitizing the $100 billion per month in new mortgages being originated. Simply shutting down the enterprises would drive up interest rates and limit mortgage availability."
Nonetheless, the agency has called for constructing a "new securitization platform" to gradually replace Fannie and Freddie, which may or may not issue securities armed with a government guarantee.
Fannie Mae said in a statement that Mayopoulus "will focus on ensuring that the company manages its legacy issues effectively, while driving the company's contributions to a better housing finance system."
"Under his leadership, Fannie Mae will continue to provide essential funding to the market, assist homeowners in distress, and work to strengthen the company's financial performance," Fannie Mae said.
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