Mnuchin: GSE reform isn’t happening in 2018

But still plans to take Fannie, Freddie out of conservatorship

Back in September, during a Politico Policy Summit in Washington, U.S. Department of the Treasury Secretary Steven Mnuchin said GSE reform would be addressed in 2018.

For all of you nay-sayers who said it wouldn’t happen – you were probably right.

During an interview with Fox Business on Monday, Mnuchin confessed that reforming mortgage giants Fannie Mae and Freddie Mac probably isn’t going to happen this year, and isn’t a priority for this Congress.

“It is something that I’m very focused on,” he said in the interview. “I think it’s unlikely that this gets done in this Congress, but it is something we’re focused on.”

Mnuchin also brought up the fact that Federal Housing Finance Agency Director Mel Watt’s term is up in January, and suggested the administration will replace him with someone who will push a GSE reform agenda.

“We also have the ability to replace the FHFA [director] next year, that’s something that we’re going to look at and make sure it’s someone that supports the agenda,” Mnuchin said. “I am determined that we have a fix to the GSEs and that we don’t leave them in conservatorship the rest of the time.”

Last year, the Treasury Secretary went on the record saying 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.

In July, Mnuchin reaffirmed that GSE reform is still a priority for the Trump administration as he testified before the Housing Financial Services Committee.

However, while the secretary continues to voice its importance, no actions have been taken on GSE reform and once again, the date is being pushed back for when it might occur.

“What gets done here would need to be on a bipartisan basis,” Mnuchin said. “We’ve had conversations with both Democrats and Republicans, and unfortunately I just don’t think this is going to be a focus in this Congress. But we’ll come back to this next year and this will be a big focus of mine post the elections.”

And in addition to pushing back the date for expected reform, the administration doesn’t seem to have a clear path forward for how to accomplish it, or if it does, it’s not giving away any clues to its plans.  

“I’m not going to comment on what the form is,” Mnuchin said in the interview. “What I would say is I think having a government guarantee on a 30-year mortgage is important for liquidity in the market. There [are] various different solutions.”

Click here to see the full interview with Fox Business.

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