Community Groups Call for Recapitalization of GSEs and End to Dividend Payments to U.S. Treasury

Washington, DC – Today, NCRC together with other consumer groups, homebuilders and small lenders sent a letter to Mel Watt, Director of the Federal Housing Finance Agency, expressing concern that the capital buffers of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac will soon be depleted as a result of the Preferred Stock Purchase Agreements between the FHFA and the U.S. Department of Treasury. The letter calls for Watt to suspend the GSEs’ dividend payments to the Treasury Department and to establish a plan for their recapitalization. 

“A complete loss of capital at Fannie and Freddie is a real danger. This would be a further detriment to the GSEs’ mission of supporting affordable housing for low- and moderate-income borrowers and securitizing loans for millions of middle class people,” said NCRC President and CEO John Taylor. “Director Watt himself has previously expressed similar concerns. The only reasonable path forward is to begin the recapitalization of the GSEs, conduct further reforms to them, and end their conservatorship.” 

The letter echoes previous concerns from NCRC about the state of the GSEs’ current conservatorship and the need for their recapitalization, further reforms, and an end to the conservatorship.

The letter can be read here.

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