A new mortgage reform proposal drafted by a blue-ribbon panel gives a fairly prominent role to private credit enhancement as a key feature in a new mortgage securitization system. While the plan released this week by the Bipartisan Policy Center’s Housing Commission – like all others that came before it – calls for a smaller government role in the mortgage sector, it remains to be seen whether it will get the reform process off the ground in a stalled political environment. The commission, comprised of former lawmakers and cabinet officials, both Republican and Democrat, calls for phasing out the government-sponsored enterprises in favor of a new federal entity that explicitly acts as a backstop of last resort after the private sector. It would replace Fannie Mae and Freddie Mac over a five- to 10-year period with a new “Public Guarantor,” a wholly government entity that would provide an explicit, but limited guaranty on mortgage-backed securities. “The government would cover...