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What does GSE reform mean for the housing recovery?

The side effects of reform

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According to an article in Bloomberg, the new U.S. Senate plan to dismantle Fannie Mae and Freddie Mac may in fact deal an unintended blow to the current housing recovery.

The much-awaited legislative text of the bipartisan reform initiative of the government-sponsored enterprises, penned by Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-ID, is now available online. The announcement spurred considerable reaction in housing finance last week and the bill's actual text will likely be no less discussed, HousingWire noted Monday morning.

“Our housing finance system is badly in need of reform. And it is clear from the reaction to our announcement last week that many people agree,” said Chairman Johnson.

“It certainly slows the rate of recovery,” said Kevin Chavers, a managing director at BlackRock Inc. and a member of its government relations and public policy group in New York. “It raises the question of what the implications are for the recovery as you raise costs and reduce the universe of people eligible to participate.”

Source: Bloomberg
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