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CM|s would be privately owned, but regulators would limit their profitability and fees <br />would be charged to cover the risk to the government. The government would set risk <br />standards for both the mortgage securities issued byCM|s and those issued by private <br />entities. CM|swould have to support affordable rental housing and could hold onlyLim- <br />ited amounts of mortgages and related securities. <br />Suggesting that the obligations ofCM|s be federally guaranteed is problematic This <br />would mean that their liabilities would be pert of the federal debt and subject to annual <br />appropriation, as is the case today with FHA. 'This would inevitably limit their activities <br />and the amount of housing credit they could supply to the sectors of the housing mar.- <br />ket open to them; in effect, they would become mini-FHAs. <br />The proposal that the government regulate the private mortgage securitization market <br />as well as securities issued by CM|s will be very controversial. More federal oversight <br />of the private mortgage market is needed, and there is legislation currently in the U.S. <br />Congress to this effect. Many in the industry, however, are strongly opposed to this. <br />This proposal is only one of many offered, and several include many ofthe same ideas. <br />'The final nature of reform will not be known for several years. <br />Reforiimiing tlhe Mortgage Origiinatiain aind Securitizatiain �Flrocess <br />Reestablishing robust private mortgage market will require both strong fundamentals <br />and a reformed mortgage origination and securitization structure that eliminates the <br />major abuses of the pest years. The incentives among mortgage originators, seouritiz- <br />ers, and rating agencies need to be aligned. One way of doing this is by requiring anyone <br />W/ <br />