Housing Policy Adviser Addresses Market Conditions, GSE Reform, & Risk Sharing

Michael Stegman, President Obama’s top adviser on housing policy, recently addressed some of the mortgage industry's hot-button topics such as housing market recovery, homeownership support for struggling buyers, GSE reform, and risk sharing.

Stegman began his speech at an event held by the National Association of Affordable Housing Lenders by addressing factors that are contributing to positive housing market recovery and noting that "a confluence of factors continues to strengthen the housing market."

"The housing recovery has been fostered by strong job creation, rising earnings, and a rebound in consumer confidence that have resulted, in part, from the important countercyclical policies put in place by the Administration and Congress. One particularly promising sign for future housing demand is that household formation has stepped up notably over the past year.

According to Stegman, home prices have rebounded over the last few years, which in turn, is boosting household wealth. In addition, single-family construction activity continues to rise, but rental rate increases suggests that demand is not being met.

Although there has been some easing of credit standards, lending is still low and many qualified borrower have trouble getting a mortgage loan, Stegman said.

As far as the GSEs reform is concerned, Stegman clearly stated the negative impact this would have on taxpayers and the nation as a whole.

"We believe that recapitalizing the GSEs with taxpayers funds and administratively–or legislatively–releasing them from conservatorship with a business model that conflicts with their public mission-in essence turning back the clock to run up to the crisis–would be both bad policy and poor stewardship of the taxpayers' interest; willfully recreating the very system that helped do this nation so much harm," Stegman explained.

In previous remarks, he advised that the GSEs should not be freed of conservatorship with their flawed charters intact, but instead government officials should take "more comprehensive approaches to reform such as those that members of Congress have introduced over the past two years including mutualizing Fannie or Freddie, or build upon bipartisan agreements on the features of a future secondary market system that were hammered out in the Senate Banking Committee last year."

However, Stegman pointed out that there is more work to be done before any action can be taken such as a more robust role for community banks and credit unions and ensuring all communities are served fairly, which the Committee will continue to fight for.

Stegman also provided an update on the Housing Finance Agencies (HFA) risk sharing noting that "as we continue our efforts to achieve housing finance reform, the shortage of rental housing, especially for extremely low-income households, is growing more acute."

"We recommend these and additional ideas from all of you on the most effective ways of strengthening the housing finance system, expanding the supply of affordable rental housing, and improving access to credit, and will remain engaged with stakeholders whose experiences and insights we highly value," Stegman concluded.

Click here to view his full speech.