WASHINGTON (September 5, 2018) – On September 6, 2008, as the financial crisis continued to disrupt markets across the globe, the Federal Housing Finance Agency moved to secure America’s housing industry, placing Fannie Mae and Freddie Mac into conservatorship. At the time, the FHFA took this action “to help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their [housing] mission, and mitigate the systemic risk that has contributed directly to the instability in the current market.”
Today, a decade later, the American financial and mortgage lending systems look vastly different, thanks in part to safe and sound lending and regulatory policy reforms supported and advanced by the National Association of Realtors®. Home prices are at or approaching record highs in many markets, while mortgage default and foreclosure rates sit near historic lows. In the meantime, the federal government’s conservatorship of Fannie Mae and Freddie Mac continues, with no long-term reform solutions on the horizon.
National Association of Realtors® President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, reflected on this week’s anniversary, and reiterated NAR’s support for sustainable, long-term GSE reform.
“Realtors® support a methodical, measured approach to reform that will put Fannie Mae and Freddie Mac on the path to sustainability. First and foremost, we urge policymakers in Washington to prioritize GSE reforms that will protect taxpayers, provide liquidity to the broad national market, and promote stability in the housing market, particularly during times of economic distress.”
NAR believes that Fannie Mae and Freddie Mac should be replaced by a government authority(s) with private capital that is subject to tighter regulations and revenue generation, and is committed to fulfilling its mission as Congress intended. NAR also believes that the future housing finance system must ensure that there is mortgage capital available in all markets at all times, and under all economic conditions. Additionally, Realtors® believe it is critical to secure an explicit government guarantee in the secondary market, which should ensure the availability of long term, fixed-rate mortgage products (i.e. 30-yr fixed-rate mortgage).
NAR also continues to champion the importance of continued affordable mortgage capital availability for creditworthy Americans, particularly during economic downturns. This is a vital role that a fully private entity could not fill, and a reason why long-term GSE reform remains such a critical priority, even during times of U.S. economic expansion.
“Ultimately, without the government’s support of the GSEs and FHA-insured loans, private capital for mortgage lending would dry up during economic downturns, leaving home owners and home buyers with few – or no – options. This situation could be potentially devastating for the American economy, but fortunately it is avoidable. And it’s why NAR will continue to advocate for Congress and the administration to enact smart, comprehensive housing finance reforms that protect the nation’s housing market,” Mendenhall concluded.
On Wednesday, the National Association of Realtors, in conjunction with approximately 30 organizations that comprise the GSE Reform Coalition, sent a letter to the administration and Congressional leaders urging reforms to GSEs that will protect American taxpayers while protecting critical GSE functions. “Only through such efforts can we ensure an affordable, accessible housing finance system that works for American homeowners and renters alike,” the letter reads.