The National Association of Realtors® GSE Reform Press Release Statement:
“The National Association of Realtors® thanks President Trump and his administration for initiating thoughtful, genuine effort toward housing finance reform. We look forward to reviewing the proposal in more detail and are optimistic that, at a minimum, the administration’s efforts will shed light on the remaining mile markers on the path to reform."
“NAR continues working with the White House and Congress as we move closer to securing palatable, pragmatic improvements to our housing finance system, and we maintain our belief that NAR’s blueprint for GSE reform represents the best path forward for this system and our economy. Our proposed utility model, as any successful reforms must, highlights competition, protects taxpayers and remedies the failures of the pre-crisis system while ensuring equal access for responsible, mortgage ready Americans in every market, safeguarding the role the GSEs were intended to play in our housing market.”
The National Association of REALTORS® GSE Reform Proposal
Recently, the White House took a significant step forward in its goal of reforming our nation’s housing finance system. As Fannie Mae and Freddie Mac have spent more than a decade under the direction and oversight of the federal government, the Trump administration made ending conservatorship a priority of its past year.
The National Association of Realtors® is offering answers to questions regarding the Trump administration’s impending release of its proposal to reform the Housing Finance system and end the conservatorship of Fannie Mae and Freddie Mac (GSEs).
What will happen to the housing finance system following this announcement?
- NAR does not expect the pending announcement will call for any immediate changes, but rather to outline the steps remaining needed to end the conservatorship of the GSEs, a timeline for the changes, and whether the administration or Congress can make the changes. Some changes could come within months of the announcement, though.
- A number of the components in the proposal floated by the administration have been discussed repeatedly in Washington for years, particularly since President Trump made GSE reform a focus of his presidency.
- This is one step of many in the long, ongoing process to secure GSE reform that will put our housing finance system in position to serve aspiring homebuyers and the housing market in the decades ahead.
Do you anticipate any changes to the 30-year mortgage or to interest rates?
- Economic conditions are critical in a presidential election year, so the Trump administration will likely avoid any moves that could disrupt the housing market or the economy, particularly one that could jeopardize something as universally popular as the 30-year fixed-rate mortgage.
- More likely, the report will focus on capital standards for Fannie and Freddie, the scope of the GSEs market coverage, and on the prospects a of government guarantee, also meaning little volatility in interest rates as a result of the announcement.
What are the next steps in GSE reform?
- Fannie Mae and Freddie Mac have spent 11 years in conservatorship. They have been heavily reformed and refocused to support the nation’s housing finance system and to prevent another crisis. This process has taken years and will take more to finish it correctly.
- The administration is likely to determine whether the GSEs’ debt to the government is repaid, whether and how they should be allowed to build capital, how much capital they need, and potentially aim to shrink the GSEs market coverage.
- However, several key parts of a fully reformed housing finance system can only be accomplished by Congress. Thus, the administration’s plan provides important mile markers, but it will need to work with Congress to complete true reform of the system
How does this plan compare to NAR’s blueprint for GSE reform?
- The White House, as implied in the President’s Memorandum on housing finance reform, aims to reduce the federal footprint in the U.S. housing market.
- In March, the White House said that Sustainable homeownership is the “benchmark of success” for reform, a position which NAR and its 1.3 million Realtor® members can support fully.
- We look forward to reviewing the proposal in more detail and are optimistic that at a minimum, the administration’s efforts will shed light on the remaining mile markers on the path to reform.
- However, we remain concerned that ill-conceived reform could increase costs and limit access for responsible, mortgage ready Americans and maintain our belief that NAR’s utility model represents the best path forward for this system and for our economy as a whole.
How does NAR plan to maintain its involvement in this process going forward?
- HUD and Treasury sought NAR’s input for its report over recent months, and NAR’s staff shared opportunities for improvement and points of concern with the administration at every turn.
- We will continue pursuing our proposal – which highlights competition, protects taxpayers and remedies the failures of the pre-crisis system while ensuring the American Dream of homeownership is available to aspiring buyers in every market in the country – as the best possible path forward for GSE reform.