Washington Examiner, June 21, 2018: White House proposes re-privatizing mortgage giants Fannie, Freddie
The White House proposed Thursday to move Fannie Mae and Freddie Mac out of government custody and back into the private sector, the most comprehensive statement of the administration’s preferences on housing finance reform yet.
The proposal, included in a broader government overhaul plan, would resemble draft legislation authored by Sen. Bob Corker, R-Tenn., meant to attract bipartisan support. It would require Congress to act, suggesting that the Trump administration doesn’t intend to pursue a major administrative overhaul of the two-bailed out mortgage giants.
It calls for allowing Fannie and Freddie to enter the private sector after being in government conservatorship since 2008. Then, they — and their competitors that might enter the market — would be given an explicit government guarantee on mortgage-backed securities that they issue.
Fannie and Freddie help create a secondary market for home loans by buying mortgages from banks and other lenders, and packaging them into securities for investors to purchase, with a guarantee that they will be covered if the loans fail.
The two also have affordable housing mandates and are required to shunt some earnings toward affordable housing trust funds. In the administration’s proposals, the Department of Housing and Urban Development would administer aid to low-income households.
That part of the plan invites opposition from affordable housing groups. They have opposed the Corker draft, which in turn has failed to gain Democratic support.
National Community Reinvestment Coalition CEO Jesse Van Tol called the plan “an assault on America’s working class” based on the elimination of affordable housing goals.
