Lockhart: Fannie, Freddie to Play Key Roles in Economic Recovery
Federal Housing Finance Agency director James Lockhart III said GSEs Fannie Mae (FNM) and Freddie Mac (FRE) -- along with the Federal Home Loan Banks -- will maintain prominent roles in the country's economic recovery, according to a press release Friday by the National Association of Realtors. "As director of FHFA, I am using the authorities established in the Housing and Economic Recovery Act of 2008 to ensure that the housing GSEs provide stability and liquidity to the mortgage market, support affordable housing and operate safely and soundly," Lockhart announced at the NAR's 2008 annual conference. While Lockhart said placing Fannie and Freddie into conservatorship was necessitated by "an inherent conflict and flawed business model embedded in the GSE structure," he assured industry players that the FHFA will uphold its responsibility to strengthen the enterprises. Originators, at least, seem to agree with Lockhart's conviction that placing the GSEs into conservatorship was a necessary action. A recent survey conducted by research firm MORTECH LLC showed 75 percent of lenders believe the government had good reason to intervene. The NAR has also said it supports measures by FHFA to control the economy, culminating in the announcement Friday of new GSE loan limits for deemed "high-cost" areas. The NAR in October submitted a stimulus plan to Congress and the administration, calling for consumer-driven provisions to eliminate repayment of the first-time home buyer tax credit currently in place and a general refocus of federal effort on supporting the housing and mortgage markets instead of "providing capital to banks with no strings attached." "Our members see firsthand the impact that an unstable housing market is having on communities all across the country," said NAR president Richard F. Gaylord. "Ensuring that the nation has a strong secondary mortgage market and continued affordable financing will certainly help stabilize housing prices." Write to Diana Golobay at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.