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Mnuchin: Housing finance reform still a priority for Trump administration

Reform to increase private sector participation

U.S. Department of the Treasury Secretary Steven Mnuchin testified before the House Financial Services Committee Thursday, assuring members that housing finance reform remains a priority for President Donald Trump’s administration.

Committee Chairman Jeb Hensarling, R-Texas, began the hearing by explaining the economy is not performing at its potential. He explained in order to create a sounder economy, Washington must begin to look at the cost of regulations.

Among other priorities set forth by the administration, Mnuchin explained housing finance reform remains at the top. In his prepared remarks, he said the current system, where the GSEs remain under the Federal Housing Finance Agency’s conservatorship, is unsustainable and leaves taxpayers at risk.

From the prepared remarks:

Our housing finance policy should be clear and should be designed to provide financing for homeowners and owners of multi-family units. Additionally, such policy should increase private sector participation and protect taxpayers. The Administration continues to study this issue and engage with stakeholders inside and outside the government in advance of providing recommendations.

The Treasury secretary also mentioned rolling back some of the regulations on the finance industry – an idea that Democrats were not happy about.

“Indeed, in June, the Treasury released a report with recommendations that largely mirror Chairman Hensarling’s ‘Wrong Choice Act,’” Ranking Member Maxine Waters, D-Calif., said during the hearing. 

“You recommended gutting the Consumer Financial Protection Bureau, and rolling back important Dodd-Frank reforms, including rules in place to ensure the stability of our financial system, like stress tests and living wills,” Waters said. “These recommendations are deeply harmful and shortsighted given the progress we’ve made since the financial crisis.”

This is not the first time Mnuchin promised housing finance reform is on its way. Earlier this year, the Treasury secretary said to expect GSE reform during the next four years.

And the market is gearing up for the promised reform. The Mortgage Bankers Association published a 60-page whitepaper earlier this year, giving Congress a roadmap to secondary mortgage market reform.

The video below shows the full hearing:

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