U.S.
President Donald Trump’s administration last week put forward
several proposals aimed at modernizing the Federal Housing Finance
Agency and ending the federal government’s decade-long
conservatorship of the government-sponsored enterprises.
The
proposals came following a demand from President Trump that
responsible agencies come up with some meaningful reforms to the
system, in order to reduce risk for taxpayers in future economic
downturns.
The U.S. government took control of Fannie Mae and Freddie Mac during the 2008 financial crisis, putting it under the conservatorship of the FHA. It also invested $191 billion into those agencies. Since then, both Fannie and Freddie have returned to profitability, and paid back almost $300 million into the U.S. Treasury, the Los Angeles Times reported.
Besides
ending conservatorship, the government has suggested various reforms
to protect Fannie and Freddie in future, including expanding private
markets and creating more competitors in the home loan industry. The
timeline for the proposals is still vague, and more details will be
provided in future, but the National Association of Realtors was
quick to commend the initiatives.
“We look forward to reviewing the proposal in more detail and are optimistic that, at a minimum, the White House’s efforts will shed light on the remaining mile markers on the path to reform, along with the critical role GSEs and the Federal Housing Administration play in America’s housing market,” NAR President John Smaby said in a statement.
Smaby
added that the association remains committed to working with the
White House and Congress to secure “pragmatic improvements to our
housing finance system.”
He
further said the NAR will remain vigilant in negotiating provisions
to protect the housing market and the important role government plays
in ensuring the flow of capital for housing.
The
NAR had previously proposed its own blueprint for GSE reform, which
“highlights competition, protects taxpayers, and remedies the
failures of the pre-crisis system while ensuring equal access for
responsible, mortgage-ready Americans in every community—safeguarding
the role the GSEs were intended to play in our housing market,”
Smaby said.
The
Obama Administration also released a housing finance reform proposal
in 2011. Like that proposal, the new White House proposals face high
regulatory and legislative hurdles, and NAR analysts say you can
expect no change in the near term.
Source: realtybiznews.com