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Housing industry responds to Trump’s calls for housing finance reform

Groups applaud president's official step toward instigating long-awaited change

On Wednesday, President Donald Trump signed a memorandum issuing “overdue reform of the housing finance system” and calling for an end of the conservatorship of Fannie Mae and Freddie Mac.

The move was announced during the second day of Senate Banking Committee hearings on GSE reform, a topic that has long been punted around Capitol Hill and discussed by members of the Trump administration, who have been vocal about ending the conservatorship and reducing the government’s role in the housing market.

According to the president’s directive, the Department of Housing and Urban Development and the Treasury Department will be tasked with drafting proposals for reform, with the Treasury detailing Fannie and Freddie plans while HUD lays out a plan for the housing finance agencies it oversees.

The memorandum details programs and objectives that the government agencies are asked to analyze for reform, but it doesn’t provide many other specifics.

Absent concrete details for change, most groups in the housing space applauded the president’s move as an official step forward to instigating long-awaited change.

And, thus far, it appears they’re all ready to work together to make it happen.

Secretary of the Treasury Steven Mnuchin was among the first to respond.

“I look forward to working with FHFA, HUD, Congress, and other stakeholders to address the need for housing finance reform as laid out by President Trump’s Presidential Memorandum,” Mcuchin said. “We support a system that provides for access to lending for hardworking Americans, while also protecting taxpayers from risk. An effective and efficient federal housing finance system will also meaningfully contribute to economic growth.”

The Mortgage Bankers Association applauded Trump for championing change that would foster competition in real estate finance and protect taxpayers.

“We are heartened the memorandum recognizes the GSEs should be released from conservatorship only after specified reforms, and that it insists on other core principles such as preserving the 30-year fixed-rate mortgage and leveling the playing field for lenders of all sizes,” said MBS President and CEO Robert Broeksmit. “MBA looks forward to working with the Trump administration, Congress and other stakeholders to achieve comprehensive reforms in a bipartisan fashion.”

The National Association of Realtors shared similar sentiments.

“Realtors are encouraged to see conversations surrounding GSE reform intensifying in Washington, particularly with the White House today directing the U.S. Treasury to outline plans for how Fannie Mae and Freddie Mac can be removed from conservatorship," NAR President John Smaby said.

“While NAR believes the GSEs must be transitioned out of conservatorship, this must be done in a responsible manner that will protect taxpayers and retain the Enterprises’ public mission, and these actions must be driven by Congress," Smaby added. "This is the only way to secure an explicit government guarantee, a public mission and the 30-year fixed rate mortgage, critical components of a robust U.S. housing market. That point will remain NAR’s primary focus as we continue GSE reform conversations with the Senate, House and the administration.”

The National Association of Home Builders also chimed in.

“NAHB is especially pleased that his memorandum specifically cites the importance of preserving the 30-year, fixed-rate mortgage, which has enabled millions of American families to build wealth and financial security through homeownership,” said NAHB Chairman Greg Ugalde, who also testified at the hearings on the matter earlier this week.

“The right reforms are critical to maintain a healthy housing market and ensure that single-family and multifamily housing credit for sale and rental properties remains readily available,” Ugalde continued, without failing to mention, of course, that the NAHB looks forward to working with both parties to pass reforms.

The National Association of Federally-Insured Credit Union is also a fan of Trump’s move.

“A healthy secondary mortgage market is of the utmost importance to Americans, and we support efforts by the Trump administration to reform our housing finance system in a way that promotes competition and puts an end to taxpayer bailouts,” said NAFCU President and CEO Dan Berger.

“To this end, NAFCU will continue to push for legislative measures to guarantee access to the secondary mortgage market for lenders of all sizes, loan pricing at the GSEs that is based on quality not quantity, and the establishment of an explicit government guarantee at the GSEs to provide certainty in the marketplace,” Berger continued. “To protect taxpayers and the safety and soundness of the housing finance system, the GSEs also should be permitted to rebuild capital.”

Finally, LeadingAge, a nonprofit that provides services for the aging that include affordable housing, shared its thoughts.

“Any government-sponsored enterprise reform must protect and expand resources to the deeply targeted national Housing Trust Fund, which receives its funding exclusively from Fannie Mae and Freddie Mac,” said Linda Couch, VP of Housing Policy at LeadingAge. “The HTF provides funds to build and operate homes for the very lowest income households, including older adult households.”

“Fannie and Freddie are critical partners in efforts to address the affordable housing shortage,” Couch continued, “any GSE reform should capitalize on their programs and expand them to more quickly meet pressing needs.”

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