Washington – Today, in response to Federal Housing Finance Agency Director (FHFA) Mel Watt’s remarks at the Bipartisan Policy Center regarding the conservatorship of the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the National Community Reinvestment Coalition’s President and CEO John Taylor made the following statement.
“We are pleased that Director Watt has acknowledged that the current trajectory for the government-sponsored enterprises (GSEs) in conservatorship is not tenable. The wind down of Fannie Mae and Freddie Mac directly impacts the obligation they have to facilitate affordable housing and affordable mortgage credit for low- and moderate-income (LMI) communities.”
“With a capital buffer declining to zero and with reduced income from the enterprises’ declining retained portfolios, the mission of the enterprises is in serious jeopardy.”
“Today, LMI borrowers across the country are paying guarantee fees consistent with the enterprises holding a capital buffer of over 2%, yet they are not allowed to retain that capital, and LMI communities are getting much less commitment from Fannie Mae and Freddie Mac.”
“FHFA’s response to the fact that so many creditworthy borrowers in LMI communities and minority communities across the country cannot access conventional mortgage credit has certainly been better under Director Watt, but it is still not enough to ensure that the GSEs are able to fulfill their mission.”
“We agree with Director Watt that the Fannie and Freddie conservatorship is unsustainable. It’s clear that action must be taken to recapitalize the GSEs and ultimately end the conservatorship.”
Last year, NCRC released a white paper calling for the recapitalization and continued reforms of the GSEs.