Taking a look over at Bloomberg.com we see Fannie Mae will be seeking 15.3 billion in aid after their 10th straight quarterly loss.  This is coming shortly after the Treasury lifted a $200 billion dollar bail out limit on Christmas Eve and has decided to back them unlimited until 2012.  Smaller rival to Fannie Mae, Freddie Mac saw a much smaller negative last quarter and will not be seeking additional aid from the government.  Fannie Mae’s net worth is currently at around negative $15 Billion.

Both sides of the political spectrum have been arguing about how to fix the housing crisis.  Should we continue to fund a company with 10 consecutive quarters of huge losses with tax payer money?  Should the system be totally overhauled?  Should Fannie Mae, Freddie Mac and other similar institutions be shut down and become a thing of the past?  If so, what will replace them?  How can we bring the same security of home loans and still have funds available for potential home buyers?

This week (ending Jan 22nd) the average 30-year fixed-rate mortgage dropped to 4.99% from last week when it was at 5.06%.  30-year fixed-rate mortgages at the same time last year were 5.12%.  This is great news for potential home buyers as this 3 week in a row drop is great when paired with the Tax Credit for new home buyers that is being offered until April of 2010.

Today Barney Frank said he looks to abolish Fannie Mae and Freddie Mac saying, “The remedy here is, as I think the committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” said Frank, chairman of the House Financial Services Committee. “That’s the approach, rather than the piecemeal one.”

Frank, along with the rest of The Financial Services Committee, is just starting its work on the issue and plans to move slowly. The committee’s first step is to talk to groups like the Center for American Progress and the National Association of Realtors, both who have prepared documents with reccomendations for the overhaul.

David Min, an associate director for the Center for American Progress, said that whatever new structure the mortgage lenders would take, any entities receiving government backing would need to be more heavily regulated to limit risk, with greater product restrictions on mortgage-backed securities and higher capital than what Fannie and Freddie had. The Center argues that reforms should apply to both public and private markets.

You can read more on Boston.com:  Barney Frank to Abolish Fannie Mae and Freddie Mac