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Update on GSE Reform

The Donald Trump administration’s plan for Fannie Mae and Freddie Mac may not be published until September. Reuters reports that the U.S. Treasury is dealing with several other issues, putting the plan for the GSEs on hold for now. 

According to Federal Housing Finance Administration (FHFA) Director Mark Calabria, he hopes Fannie and Freddie would have exited or be ready to exit conservatorship before his term ends in 2024. Calabria told Reuters that he is not operating toward a hard deadline.

“That’s my time horizon,” he said. “I’m under no expectation to try to get all this done. ... So if in four years, nine months they’re not out of conservatorship, I’m not pushing them out.”

Calabria stated that Treasury Secretary Steven Mnuchin is currently “juggling a number of balls,” while Craig Phillips, Mnuchin’s adviser who had been closely involved in the reform plan, also left in June.

Additionally, Calabria stated that the Treasury will back some form of government guarantee for Fannie and Freddie in the report, and notes that the government does not have forever to overhaul them and needs to progress while the housing market remains stable.

“The market looks pretty strong now, so that to me is the time when we want to make real repairs,” he said.

Earlier this year, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on Tuesday titled “Should Fannie Mae and Freddie Mac be Designated as Systemically Important Financial Institutions?” 

In his opening statement, Committee Chairman Mike Crapo discussed the importance of reevaluating the GSE’s place in the mortgage market, noting FHFA Director Mark Calabria’s push to end the conservatorship of Fannie and Freddie.

“In recent weeks, FHFA Director Mark Calabria has repeatedly stated, quoting President Kennedy, that ‘the time to repair the roof is not in the middle of a downpour but when the sun is shining,’” said Crapo in his opening statement. “I agree with this sentiment. We have a key opportunity right now, while the sun shines on our economy and mortgage markets are healthy, to put our housing finance system on a durable, sustainable course that can withstand any market cycle.”

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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