Politics & Money

Calabria to Fannie, Freddie: Competition is inappropriate while in conservatorship

Lays out need to define roles before conservatorship ends

Federal Housing Finance Agency Director Mark Calabria said Monday that Fannie Mae and Freddie Mac should not be competing with each other for market share.

In a press briefing at the Mortgage Bankers Association’s Annual conference in Austin, Calabria said he has expressed to the enterprises that it is inappropriate for them to compete with each other for market share while in conservatorship.

He said that once they are exit conservatorship they can complete, but while they remain in conservatorship the market share that they came in with should be how it remains until conservatorship ends.

And it’s not just competition between each other that the director is concerned about. He also expressed the need to define the roles of Fannie and Freddie so that they are not competing with the Federal Housing Administration once they exit conservatorship.

Calabria explained that if Fannie and Freddie reach down and skim the cream from the Federal Housing Administration, or take FHA market share by originating the higher quality loans, it will leave the department in a bad place with only the riskiest borrowers utilizing its services.

In his keynote speech Monday morning, Calabria said that better defining differences as the GSEs prepare to leave conservatorship, and reducing “irresponsible and needless competition” between the enterprises and FHA will strengthen and stabilize the FHA fund.

And Department of Housing and Urban Development Secretary Ben Carson agreed roles should be clearly defined in order to reduce overlap.

“To ensure the GSEs have well-defined boundaries in the housing market and avoid overlapping roles, we suggest the FHFA and the FHA collaborate,” Carson said during his keynote speech at the conference.

But all of that comes as preparation for after the GSEs exit conservatorship. For now, Calabria’s message to the GSEs was clear – stop competing between each other, it’s not appropriate.

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