New FHFA Director Speaks to Realtors® on Fannie Mae, Freddie Mac Reform

WASHINGTON (May 14, 2019) – Today, at the National Association of Realtors®' Regulatory Issues Forum, newly-appointed Federal Housing Finance Agency Director Mark Calabria spoke to hundreds of Realtors® and industry leaders regarding his vision for the future of Fannie Mae and Freddie Mac. Tuesday's forum also presented an opportunity for NAR to highlight its housing finance reform plan, which proposes a utility model to ensure a reliable and affordable source of mortgage capital for Americans going forward.

Bethany McLean, a contributing editor at Vanity Fair and author of "Shaky Ground: The Strange Saga of the U.S. Mortgage Giants," moderated Tuesday's event. NAR Members and Regulatory Issues Forum Chairman and Vice-Chairman Kurt Thompson and Dean Dawson were also on hand to open and close the panel.

McLean led Tuesday's discussion with Director Calabria, diving deeper into the former NAR economist's priorities in his new role at the helm of the FHFA.

"One of the things I'm going to be trying to do across the board is [determine how we] level the playing field to where all large financial institutions have similar capital," Director Calabria told the group at the Washington Marriott Wardman Park Hotel. "[That will ensure] the GSEs have a good business model because they have good management and good execution—not because they have lower standards than everyone else—and so we have that capital there to protect the taxpayer. At the end of the day, I think that can be done in a way that really does not adversely impact the consumer."

Perhaps most notably to many of the Realtors® in attendance Tuesday, the director said loan limits will remain untouched during his tenure at FHFA. He also assured the audience that work to preserve the 30-year mortgage remains critical.

"The process of setting loan limits is very mechanical," he said. "It's in statute–Congress decided. That's not my decision, so loan limits are not going to change from what's in statute."

Still, conversations surrounding the prospects, principles and policies of the GSE reform drove Tuesday's discussion, as they will likely drive much of Director Calabria's 5-year term atop the FHFA. Specifically, McLean pressed on his approach to orchestrating an end to Fannie and Freddie's conservatorship.

"I would not feel comfortable having [the GSEs] exit conservatorship until I'm comfortable knowing that we never go back to the old days, pre-crisis, and that we have a Fannie and Freddie that are responsible, good corporate citizens that don't have the arrogance we saw before the crisis," he said.

Although unity surrounding any specific policy changes has yet to emerge in Washington, Realtors® have in hand, a ready-made, pragmatic and workable plan for housing finance reform.

"Because of the GSEs, homebuyers in Springfield, Missouri and Springfield, Massachusetts have equal access to a mortgage and pay nearly identical rates," NAR President John Smaby said. "That's why Realtors® have worked so hard to develop a plan that keeps our housing finance system solvent, and why we'll be able to help aspiring homeowners for decades to come."

NAR's plan would transition Fannie Mae and Freddie Mac into private, shareholder-owned utilities that would continue to purchase, guarantee and securitize single-family and multifamily mortgage loans.

"By retaining an emphasis on private capital, our model protects taxpayers, consumers and the U.S. economy," Smaby continued. "Most importantly, as utilities, Fannie's and Freddie's foremost priority would be to serve the public mission instituted by Congress—to support stability, liquidity and access in the mortgage market."

The Realtors®' proposal drew praise at Tuesday's forum. "NAR's plan for GSE Reform is the smartest we've heard to date," McLean, who also authored "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron," told the crowd at Marriott Wardman Park.

As Congress and the FHFA each plan their own path toward GSE reform, Calabria and McLean highlighted some of the issues that require cooperation between the administration and legislators on Capitol Hill.

"I really would like to see Congress act," Calabria added. "There are a number of things that I can do and will do, but the overall problem is about the model. I can get the GSEs out of conservatorship, I can make sure they're better capitalized and better regulated, but essentially the model is the model. If there is going to be a change in the model, Congress has to do that."

The National Association of Realtors® is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries