Initial talks from the Trump administration on reforming Fannie Mae and Freddie Mac are not happening as quickly as originally anticipated due to a growing back log of things to accomplish in Washington D.C.
Despite the slowed-down timeline, some of the biggest housing finance groups joined together to remind U.S. Treasury Secretary Steven Mnuchin and Mel Watt, Federal Housing Finance Agency director, to stay focused on government-sponsored enterprise reform.
“We urge Treasury, FHFA and Congress to remain focused on addressing the long-term housing finance reform efforts necessary to end GSE conservatorship permanently and create a stronger, stable system for the future that helps ensure all in America have access to affordable housing opportunities,” the groups stated in a joint letter.
The list of housing finances groups listed in the letter includes: American Bankers Association, American Land Title Association, Asian American Real Estate Association, Committee on Healthcare Financing, Consumer Bankers Association, Consumer Mortgage Coalition, Habitat for Humanity, Housing Policy Council of the Financial Services Roundtable, Mortgage Bankers Association, National Affordable Housing Management Association, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Housing Cooperatives, National Housing Conference, and the Real Estate Services Providers Council, Inc.
“We are increasingly concerned about efforts to derail comprehensive reform. We urge both Treasury and FHFA to focus on continuing to work with Congress to end conservatorship through comprehensive, bipartisan, legislative reforms,” the letter stated (the full letter can be found here).
Mnuchin, who the letter is partly addressed to, recently said during a Politico Policy Summit in Washington that GSE report would be an issue addressed in 2018.
“We need to fix Fannie and Freddie, and that’s something that since I got in office I said I was determined to do,” Mnuchin said at the time.
“Given where we are on taxes, realistically this is now a 2018 issue, but we’re going to fix it,” he said. “And when we fix it, we want to make sure that we never put the taxpayers at risk while at the same time retain the critical 30-year mortgage.”
The public statement followed comments from Mnuchin earlier this year when he said that GSE reform will occur during President Donald Trump’s administration. He explained that while it may not be the no. 1 priority, it is on the agenda.
This latest latter from housing associations is a reminder to Mnuchin and Watt that they haven’t forgotten about the need for reform.
“As you both have made clear on numerous occasions, housing finance reform must go through Congress to create stable, sustainable housing markets that best serve our nation’s communities,” the letter stated. “We fully endorse this point of view, and believe the debate over recapitalizing a broken system distracts from the critical structural issues that Congress must address to ensure that the federally-supported secondary market serves key, bipartisan objectives.”
One instance that the letter is referring to is from back in May of this year. During a speech at the American Mortgage Conference hosted by the North Carolina Bankers Association, Watt said he believes the conservatorship of Fannie Mae and Freddie Mac must end through Congressional action.
“I have said repeatedly, and I want to reiterate, that these conservatorships are not sustainable and they need to end as soon as Congress can chart the way forward on housing finance reform,” Watt said.
However, not all housing groups are on board with the letter.
Glen Corso, executive director Community Mortgage Lenders Of America, who didn’t sign the letter, said, “It is actually quite sad to see the big bank associations and other groups that should know better, be willing to gamble with the stability of the $5 trillion U.S. mortgage market by advocating against a capital buffer for Fannie Mae and Freddie Mac.”