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What Mark Calabria’s FHFA Confirmation Means for the Industry

On Thursday afternoon, the Senate voted to confirm Dr. Mark A. Calabria as Director of the Federal Housing Finance Agency. Calabria was confirmed by a vote of 52-44. Calabria was nominated for the post of Director of the FHFA by the Trump administration in December 2018. Prior to being nominated for this position, he was the Chief Economist to Vice President Mike Pence.

Calabria steps into the role as head of FHFA at a time when housing finance reform has been a hot topic in both Washington, D.C., and beyond, including discussions about whether the conservatorship of the GSEs, Fannie Mae and Freddie Mac, should be ended. (To read more on the topic of GSE and housing finance reform, check out our April DS News cover story, available to read online in full.)

“I congratulate Mark Calabria on his confirmation by the U.S. Senate to serve as Director of the Federal Housing Finance Agency," said FHFA Acting Director Joseph Otting. "I am confident that Mark will do a great job leading the FHFA, as he recognizes the need to work toward a housing finance system that protects taxpayers and meets our nation's housing needs."

"A strong and stable FHFA is pivotal to the health of the housing market," said Ed Delgado, President and CEO, Five Star Global. "We look forward to working with Dr. Calabria and his leadership team as they guide the agency into its next phase."

“We congratulate Dr. Calabria on his confirmation and commend the Senate on voting to confirm this immensely qualified nominee," said National Rental Home Council (NRHC) Executive Director Diane Tomb. "Dr. Calabria’s decades of experience in housing policy and deep commitment to public service will serve him well as he leads the Federal Housing Finance Agency over the next five years. The National Rental Home Council looks forward to working with Dr. Calabria and his new colleagues at FHFA to expand access to quality rental homes nationwide and ensure that our housing system provides stability and liquidity for all Americans, whether they choose to rent or own their home.”

Lindsey Johnson, President of U.S. Mortgage Insurers, issued a statement reading, "Director Calabria’s deep understanding of the mortgage finance system will be invaluable in promoting a more robust housing market that provides borrowers with access to affordable low down payment mortgage credit while simultaneously protecting taxpayers from undue mortgage credit risk. Director Calabria has long been an advocate for greater taxpayer protection against mortgage credit risk, including the use of private mortgage insurance (MI) to shield taxpayers and the federal government from financial risk on low down payment lending. We are confident that Director Calabria will continue to recognize the importance of private MI in the housing finance system."

National Association of Realtors (NAR) President John Smaby said, "Dr. Calabria has decades of experience in the housing industry, including time spent as an economist at NAR, and he understands the critical importance of the FHFA’s prudent management of America’s housing finance system. As he begins his tenure, we urge Director Calabria to work closely with Congress in the effort to responsibly reform the GSEs, particularly in search of policies that protect the 30-year fixed rate mortgage, secure a government guarantee and emphasize taxpayer and consumer protection.”

“We look forward to working with Director Calabria and the FHFA to ensure that the secondary market of the future continues to make it possible for credit union members to have access to responsible and affordable mortgage credit and appreciate his recognition of the importance of the 30 year, fixed-rate mortgage,” said Credit Union National Association (CUNA) President/CEO Jim Nussle. “We welcome the opportunity to further build upon and strengthen the existing partnerships between credit unions, the government-sponsored enterprises, and Federal Home Loan Banks.”

Recently, Calabria had told the Senate Banking Committee during a hearing that "FHFA is absolutely necessary. In fact, I want to raise the stature of FHFA. I remember how the employees at its predecessor felt and their inability to stand up and be able to do effective financial regulation. I'm committed to seeing turning FHFA into a world-class regulator."

During his nomination hearing, Calabria gave an outline of what his priorities would be if confirmed. Calabria said that a number of critical elements were needed in reform such as a "greater need for competition." He said the current FHFA mandate was clearly where "the regulator cannot make such changes." As a result, he said, "The very broad changes that have to happen in the mortgage finance system have to be done by Congress."

Calabria said that if he was confirmed as the FHFA Director his objective would be to ensure the GSEs were, "well capitalized, well managed, and well regulated."

Addressing his views on the affordable housing goals Calabria said that his past concerns with affordable housing goals were in the context of "two large institutions with zero capital." However, he added, "I do believe we can get to a spot where we can have risk-taking via affordable housing goals if we can have an appropriate regulatory structure that has capital backing those goals. I'm very concerned about any large financial institution where we push it to take an additional risk without the appropriate regulatory structure in place."

Clarifying his comments on getting rid of the GSEs in the past, he said that they were essentially pointed towards getting rid of the model of privatizing gains and socialize losses. "I believe all large financial institutions need to be well capitalized more managed, more regulated, and I believe the GSEs were "none of the above" before the crisis. "I want these entities to be good corporate citizens, I want them to be the model of how other corporation should want to behave."

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].
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