The Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) would be privatized under a 53-page plan released Thursday by the Treasury Department to reform the housing finance system.
“An effective and efficient federal housing finance system will … meaningfully contribute to the continued economic growth under this Administration,” U.S. Treasury Secretary Steven T. Mnuchin said in a statement.
The department said its plan, which proposes more than 50 changes, follows the issuance of a June memorandum by President Donald Trump directing the Treasury secretary “to develop a plan for administrative and legislative reforms to address this last unfinished business” of the 2008 financial crisis.
The plan also calls for the Federal Housing Finance Agency and the Department of Housing and Urban Development to develop and implement “a specific understanding as to the appropriate roles and overlap” between the government-sponsored enterprises (GSEs) of Fannie Mae and Freddie Mac and the Federal Housing Administration.
HUD issued its own plan on Thursday, too.
A coalition of several organizations came out against the Treasury plan the same day it was released.
“Adding new private guarantors to the housing finance system and privatizing Fannie and Freddie would not only increase costs, but will incentivize guarantors to chase the most lucrative markets and serve only the most profitable borrowers or regions of the country. Such a scenario would enable taxpayer-backed companies to evade their duty to serve the entire market, including urban and rural areas,” the groups said Thursday in a joint statement.
Issuing the statement were the Center for Responsible Lending, National Urban League, National Fair Housing Alliance, National Community Reinvestment Coalition, Leadership Conference on Civil and Human Rights, NAACP, National Coalition for Asian Pacific American Community Development, UnidosUS (formerly the National Council of La Raza) and the NAACP Legal Defense and Education Fund.
“Changes to the system must build upon the GSEs’ important public mission, including support for the GSEs’ existing duty to serve mandate and the affordable housing goals,” the groups said. “Furthermore, any plan for reform must recognize that much more needs to be done to bolster affordable housing, including by the GSEs. Fair lending requirements must be strengthened and fully enforced. Any effort to weaken existing requirements under the guise of ‘efficiency’ is a nonstarter.”