In recent weeks, several different groups tried to exert public pressure on the Federal Housing Finance Agency in an attempt to end the housing finance system’s current status quo.
Recently, 32 Congressional Democrats attempted to push the FHFA to allow Fannie Mae and Freddie Mac to rebuild their dwindling capital base, while a group of the largest trade organizations in housing said that their view is that “comprehensive reform to the secondary housing finance system must come through Congress,” rather than from the FHFA.
The viewpoint of the Mortgage Bankers Association, National Association of Realtors, American Bankers Association, National Association of Home Builders, and the National Housing Conference was echoed by several of the Senate’s most ardent supporters of housing finance reform, who recently sent a letter of their own to the FHFA, stating their belief that Congress should be the ones to take on housing finance reform.
Up to this point, the FHFA and its director, Mel Watt, did not respond directly to these efforts, other than Watt’s inclusion in the Financial Stability Oversight Council’s annual report, in which the FSOC members stated that they too believe that Congress needs to take the lead on housing finance reform.
But now, Watt is responding to those public salvos, albeit much more quietly than the trade groups or the politicians.
As it turns out, Watt actually sent a letter of his own on Tuesday in response to the letter from the Mortgage Bankers Association, National Association of Realtors, American Bankers Association, National Association of Home Builders, and the National Housing Conference.
Watt’s response was not made public, but it was revealed by the Wall Street Journal’s Nick Timiraos, who tweeted out a copy of the letter.
Interesting reply from Mel Watt re: GSE capital. He wants Congress to act but won't sit on his hands if they don't: pic.twitter.com/DK7Qu3YaWk— Nick Timiraos (@NickTimiraos) July 12, 2016
In the letter (a copy of which was obtained by HousingWire), Watt agrees that Congress should “tackle” housing finance reform, but cautions that in the absence of Congressional action, the FHFA will continue down its current path.
“I continue to believe that conservatorship is not a desirable end state and that Congress needs to tackle the important work of housing finance reform,” Watt said.
“In the meantime, however, you can be assured that FHFA will continue to fulfill its responsibilities to manage the conservatorships of the Enterprises in a safe and sound manner and in accordance with our statutory responsibilities,” Watt said. “We appreciate very much the input and support that you and your members continue to provide as we fulfill those responsibilities.”
To read Watt’s letter in full, click here.