The conversation continues on GSE reform, with advocates, including the National Association of REALTORS® (NAR), calling on Congress for long-term, prudent solutions.
The GSE Reform Coalition, which includes NAR, the Asian Real Estate Association of America (AREAA), the Mortgage Bankers Association, the National Association of Home Builders (NAHB), The Realty Alliance and others, asked the Administration to prioritize reform in a letter on September 5. September marks 10 years of the Fannie Mae/Freddie Mac conservatorship, enacted in the financial meltdown.
The Administration has already begun efforts to end the conservatorship, indicating its intent in a proposal this year, and, last week, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) announced the drafting of a plan, which would “repeal the GSEs’ charters…and transition to a system that allows qualified mortgages backed by an approved private credit enhancer with regulated, diversified capital resources to access the explicit, full government securitization guarantee provided by Ginnie Mae.”
“We urge policymakers to lock in recent reforms to the GSEs and complete the necessary additional reforms to protect taxpayers, provide liquidity and promote stability while taking care not to roll back aspects of the GSEs’ operations that are supporting the foundation of the housing market,” the Coalition’s letter reads.
Additionally, “Any efforts to change the role played by the GSEs must contain safeguards against higher costs or other market disruptions that reduce access to mortgage credit in both single-family and multifamily markets. They must also include enforceable mechanisms to serve the entire market of renters and qualified homebuyers, including underserved markets and manufactured housing.”
“REALTORS® support a methodical, measured approach to reform that will put Fannie Mae and Freddie Mac on the path to sustainability,” said NAR President Elizabeth Mendenhall in a statement. NAR believes that the conservatorship “should be replaced by a government authority(s) with private capital that is subject to tighter regulations and revenue generation,” according to the statement. NAR also believes “it is critical to secure an explicit government guarantee in the secondary market, which should ensure the availability of long-term, fixed-rate mortgage products.”
“Ultimately, without the government’s support of the GSEs and FHA-insured loans, private capital for mortgage lending would dry up during economic downturns, leaving homeowners and homebuyers with few—or no—options,” Mendenhall said. “This situation could be potentially devastating for the American economy, but fortunately it is avoidable, and it’s why NAR will continue to advocate for Congress and the administration to enact smart, comprehensive housing finance reforms that protect the nation’s housing market.”
“To ensure a stable housing finance system that will support the future of homeownership and affordable multifamily housing in America, Congress must fix the structural flaws inherent in Fannie Mae’s and Freddie Mac’s government charters that contributed to the housing finance crisis,” said Randy Noel, chairman of the NAHB, in a statement. “Comprehensive legislation that incorporates these elements will ensure that housing credit remains readily available and affordable in the future, provide the foundation for a stable housing finance system and protect taxpayers.
“As Congress deliberates, the administration needs to ensure that reforms put in place during conservatorship that have enabled Fannie Mae and Freddie Mac to better facilitate mortgage liquidity are not cast aside,” Noel said.
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