Treasury and HUD tasked to propose plan to overhaul Fannie Mae and Freddie Mac
President Donald Trump signed a memorandum on Wednesday that tackles the issue of federal housing finance reform.
The memorandum tasked the Department of the Treasury and the Department of Housing and Urban Development (HUD) to propose a plan to overhaul Fannie Mae, Freddie Mac, and other related federal programs – including possibly ending the conservatorship of both government-sponsored enterprises (GSEs).
“We’re lifting up forgotten communities, creating exciting new opportunities, and helping every American find their path to the American Dream — the dream of a great job, a safe home, and a better life for their children,” said President Trump.
In a statement, the White House said that both Fannie Mae and Freddie Mac have swelled in size and scope yet faced no competition from the private sector. It also noted that HUD programs are “exposed to high levels of risk and rely on outdated business processes and systems.”
The Trump administration said that it will also work with the Congress on a comprehensive plan to reform the housing finance system.
As early as last year, administration officials were already giving hints that President Trump would move to reform the federal housing finance system. According to HousingWire, Craig Phillips, a top housing advisor to Treasury Secretary Steven Mnuchin, told the crowd at the Mortgage Bankers Association 2018 Annual Conference that the Trump administration is working to end the conservatorship of Fannie Mae and Freddie Mac.
“The administration advocates ending the conservatorship of Fannie Mae and Freddie Mac and returning them to private ownership,” said Phillips. “Their charters should be removed from statute and their operations should be overseen by the primary regulator that has the authority to approve additional guarantors to introduce competition into the secondary mortgage market.”
