Real Estate Marketing & Beyond
U.S. President Donald Trump’s administration last week put forward several proposals aimed at modernizing the Federal Housing Finance Agency and ending the federal government’s decade-long conservatorship of the government-sponsored enterprises.
The proposals came following a demand from President Trump that responsible agencies come up with some meaningful reforms to the system, in order to reduce risk for taxpayers in future economic downturns.
The U.S. government took control of Fannie Mae and Freddie Mac during the 2008 financial crisis, putting it under the conservatorship of the FHA. It also invested $191 billion into those agencies. Since then, both Fannie and Freddie have returned to profitability, and paid back almost $300 million into the U.S. Treasury, the Los Angeles Times reported.
Besides ending conservatorship, the government has suggested various reforms to protect Fannie and Freddie in future, including expanding private markets and creating more competitors in the home loan industry. The timeline for the proposals is still vague, and more details will be provided in future, but the National Association of Realtors was quick to commend the initiatives.
“We look forward to reviewing the proposal in more detail and are optimistic that, at a minimum, the White House’s efforts will shed light on the remaining mile markers on the path to reform, along with the critical role GSEs and the Federal Housing Administration play in America’s housing market,” NAR President John Smaby said in a statement.
Smaby added that the association remains committed to working with the White House and Congress to secure “pragmatic improvements to our housing finance system.”
He further said the NAR will remain vigilant in negotiating provisions to protect the housing market and the important role government plays in ensuring the flow of capital for housing.
The NAR had previously proposed its own blueprint for GSE reform, which “highlights competition, protects taxpayers, and remedies the failures of the pre-crisis system while ensuring equal access for responsible, mortgage-ready Americans in every community—safeguarding the role the GSEs were intended to play in our housing market,” Smaby said.
The Obama Administration also released a housing finance reform proposal in 2011. Like that proposal, the new White House proposals face high regulatory and legislative hurdles, and NAR analysts say you can expect no change in the near term.
