A group of hedge funds and private equity companies is preparing a proposal to take over large parts of Fannie Mae and Freddie Mac, in an attempt to end a bitter dispute with the Treasury, which has controlled the US housing finance agencies for five years.
The plan is being pitched as a way to bring tens of billions of dollars of private capital into the US mortgage market and to speed housing finance reforms that remain bogged down in Congress.
The investor group includes holders of more than half the $34.6bn of preferred shares in Fannie and Freddie, who have been fighting to restore some value to the shares after the terms of the government conservatorship rendered them worthless.