Experts have said that if the plans to liquidate government-controlled mortgage guarantee giants, Fannie Mae and Freddie Mac are implemented, and the mortgage rates are expected to up in the US economy.

A group of senators in the US congress are set to complete a plan to liquidate Fannie Mae and Freddie Mac (FMCC) and replace the failed bank with a government reinsurer of mortgage securities with private capital. The two firms, which were rescued by a $187 billion taxpayer bailout during the financial crisis, now guarantee 30-year mortgages for generations. Most banks appear unwilling to offer loans for such duration without any backing from the government.

The new plan would require private financiers to accept first-loss position for covering steep losses, according to the draft of the plan. The senators are planning to introduce the plan within this month for the plan to be implemented soon. The bill has been written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner.

Experts have said that the government is working to create an alternative where the government might have to repay lenders if another housing market collapse happens in the future.