Michael Heid, co-president of Wells Fargo Home Mortgage, said that the government should shift the loan guarantee functions provided by Fannie Mae and Freddie Mac to new private mortgage securities insurance companies. The government would regulate the industry and provide a payment guarantee to investors who buy the firms' mortgage-backed securities, Heid told participants at a House Financial Services Committee hearing. "An explicit federal guarantee is needed to ensure a steady flow of mortgage finance at a reasonable cost to borrowers," Heid said.

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