On September 5, 2019, the White House released a proposal to reform the nation’s housing finance system and privatize Fannie Mae and Freddie Mac. The recommendations, if implemented, will impact operations of the Government Sponsored Enterprises (GSE) and the Department of Housing and Urban Development (HUD).
While the plan involves potential administrative, regulatory, and legislative changes, it is the start of a process that is expected to take several years and should not have any effect on housing markets in the short term.
Background
Since 2008, as a consequence of the mortgage market meltdown, Fannie Mae and Freddie Mac (“the GSEs”), have been under the conservatorship of the Federal Housing Finance Agency (FHFA). In the years that followed Treasury’s takeover of the GSEs, FHA’s share of the market has decreased, and Fannie and Freddie have returned to profitability, though their “profits” go straight into the U.S. Treasury.
There have been many proposals over the years on the future of the GSEs. NAR released its own plan in February, and the plan has garnered the support of many industry groups. NAR will continue working with Congress and the White House to advance its proposal – which highlights competition, protects taxpayers and remedies the failures of the pre-crisis system while ensuring the American Dream of homeownership is available to aspiring buyers in every market in the country – as the best possible path forward for GSE reform.
Learn more:
NAR’s Statement on White House GSE Proposal
NAR FAQs on the White House GSE Proposal
Housing Finance Reform Plan – U.S. Department of Housing and Urban Development (HUD) (link is external)
NAR Vision for Housing Finance Reform
Courtesy: The National Association of REALTORS®