ASF 2013: Fannie Mae and Freddie Mac are here to stay
Although the housing market has posted a shift in positive momentum, many factors within housing finance will likely remain for quite some time, and reform is not expected any time soon.
Experts on the U.S. housing finance sector generally concluded that Fannie Mae and Freddie Mac are here to stay, providing a limited window of opportunity in market involvement for private market players, according to a panel discussion at the American Securitization Forum on Monday.
Government sponsored-enterprise reform will not be a concerning factor Congress this year and as a result, “the center for change is going to be very low,” said Shareholder Robert Bostrom of Greenberg Traurig.
Both GSEs are reporting recent hefty profits, which is not surprising given the rise in guarantee fees. As a result, these profits are going to the U.S. Department of Treasury, providing more incentive to keep both around, said Vice Chairman James Lockhart III at WL Ross & Co.
As Congress deals with bigger issues such as the fiscal cliff, the chances of seeing GSE reform in 2013 is very slim, Lockhart noted.
Resident Fellow Edward Pinto at American Enterprise Institute stated that he expects Fannie and Freddie to remain dominant in the market for the next eight years due to the qualified mortgage rule.
With the potential of both GSEs continue dominance in the market, the private sector will remain on the sidelines, Pinto noted.
Although the government still dominates the majority of the mortgage market – roughly 80% -- Lockhart noted he is pleased with current acting director Ed DeMarco of the Federal Housing Finance Agency strategic plans, specifically the single- securitization platform.
Similarly, Chief Economist Patrick Lawler of the FHFA noted that implementing these strategic plans is a high priority and expects extensive progress throughout the year.
No timeline was officially stated for implementation of the strategic plans, although Lawler is hopeful the plans will roll out in 2013.