The National Association of Realtors (NAR) joined the Mortgage Bankers Association (MBA), the American Bankers Association (ABA), and the National Association of Home Builders (AHB) in voicing their concerns about a rushed effort to end the conservatorship of Fannie Mae and Freddie Mac.<\/p>\n
In response to the financial and housing crisis of 2006 through 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac<\/a> (government-sponsored enterprises, or GSEs) into conservatorship in September 2008. To stabilize the firms, the Treasury gave the companies a $190 billion lending package. In return, the Treasury would receive senior preferred shares<\/a>, and Fannie Mae and Freddie Mac would be required to make quarterly dividend payments to the Treasury, among other things.<\/p>\n It\u2019s 12 years later now, and FHFA\u2019s Director Mark Calabria\u2019s top priority<\/a> is to remove the company from government control and place it back in private hands before President Trump leaves office. And, the housing industry associations argue abruptly ending the conservatorship of Fannie Mae and Freddie Mac could destabilize the housing market.<\/p>\n In a letter<\/a> to the U.S. Treasury Secretary Steven Mnuchin, the housing industry associations said, \u201cWe are concerned that other potential actions to release the GSEs from conservatorship without the necessary safeguards would undermine investor confidence, create volatility in the single-family, and multifamily mortgage markets and impede access to credit for consumers.\u201d<\/p>\n \u201cDuring conservatorship, investors have relied on the Treasury backstop of the GSEs, which totals over $250 billion, as well as the effective control of the GSEs by the federal government.\u201d By ending the conservatorship with the GSEs without anything in place, the groups say it \u201ccould cause investors to reassess the nature of any backstop and result in severe market disruptions.\u201d<\/p>\n The letter points out \u201cexamples of potential harm\u201d such as: \u201ca sharp pullback in investor demand for GSE mortgage-backed securities (MBS) by investors concerned about a diminution of government support and an associated increase in credit risk exposure\u201d; And, \u201can increase in mortgage credit costs during economic crises, negatively impacting the GSEs\u2019 ability to support the market in the next crisis.\u201d<\/p>\n The housing industry<\/a> groups strongly oppose the swift ending of the conservatorship of Fannie Mae and Freddie Mac, but they don\u2019t say they expect this will go on forever. They want to flesh out a plan that works for everyone.<\/p>\n \u201cOur associations and the members we serve have worked over the past twelve years to develop reform plans and advance efforts \u2013 both legislative and administrative \u2013 that would correct structural flaws in the GSEs\u2019 pre-conservatorship business models and allow them to transition safely out of conservatorship.\u201d<\/p>\n \u201cWe have not supported, nor do we currently support, an \u201cendless\u201d conservatorship. Our position is quite the opposite \u2013 we wish to see the GSEs reformed and operating outside of government control. We therefore favor actions that move the GSEs closer to the preferred end state in a timely manner that does not disrupt the housing finance market and inflict broader economic harm.\u201d<\/p>\n And, the NAR<\/a>, along with the MBA, ABA, and NAHB now have a response to their letter.<\/p>\n