Talk of housing reform is heating up, and now several members of the housing industry are encouraging the Federal Housing Finance Agency not to go too fast, and to make sure affordable housing remains a priority throughout the process.
Many key members of the housing industry sent a letter to the FHFA, encouraging it to build on the current structure of the government-sponsored enterprises Fannie Mae and Freddie Mac.
“As the Federal Housing Finance Agency (FHFA) begins its next chapter under new leadership, our organizations seek to emphasize the vital role that Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises (GSEs), currently play in the mortgage market,” the letter, addressed to FHFA Acting Director Joseph Otting, said. “There is a unique opportunity today to maintain and build on important progress that has already been achieved in reforming the operations of the GSEs since the financial crisis.”
The letter states that GSE reform and an end to the conservatorship is ultimately necessary in order to ensure the safety and soundness of the housing market.
However, the letter encourages policymakers to act slowly and carefully.
“Any efforts to meaningfully change the GSEs’ market presence must be undertaken carefully, with vigilant monitoring and frequent recalibration (if necessary) to avoid disruptions to the flow of mortgage credit into the single-family and multifamily real estate markets,” it states. “Efforts to reduce the GSEs’ footprint should not move forward unless there is compelling evidence that the private market is able to assume an expanded role.”
The housing industry argued that GSE reform should accomplish two key objectives:
1. Preserving what works in the current system
2. Maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors or taxpayers.
“Recognizing the vital role that the GSEs currently play, it is critical that any administrative reforms do not disturb essential functions in the secondary mortgage market,” the letter said. “Policymakers must take great care that actions to institute reforms to the GSEs are prudently developed and implemented over a sensible time horizon.”
The letter asks that housing finance reform maintain the 30-year fixed-rate mortgage in the single-family market. It also asks that the GSEs still be required to meet the needs of underserved markets and support affordable housing.
“We urge policymakers to take these principles into account to ensure that access and affordability are preserved under the current, and any future, housing finance regime,” the letter concludes.
The Senate Committee on Banking, Housing and Urban Affairs recently voted to advance the nomination of Mark Calabria as director of the FHFA to a full Senate vote.
Previously, Calabria famously called for the end of the conservatorship of Fannie Mae and Freddie Mac. Click here to read more about what Calabria as director of the FHFA would mean for the future of the GSEs.
Now, many think that GSE reform could be on the verge of becoming a reality.
The letter was signed by: the Asian Real Estate Association of America, the Consumer Federation of America, the Consumer Mortgage Coalition, Enterprise Community Partners, Habitat for Humanity International Leading Builders of America, Local Initiatives Support Corporation Make Room, Manufactured Housing Institute Mercy Housing, the Mortgage Bankers Association, Nareit, the National Apartment Association, the National Association of Affordable Housing Lenders, the National Association of Hispanic Real Estate Professionals, the National Association of Home Builders, the National Association of Real Estate Brokers, the National Association of Realtors, the National Community Stabilization Trust, the National Council of State Housing Agencies, National Housing Conference, National Housing Trust, National League of Cities, the National Multifamily Housing Council, The Real Estate Roundtable, the Real Estate Services Providers Council, Stewards of Affordable Housing for the Future and Up for Growth Action.
Click here to read the letter in full.