Policy Issues

Industry Coalition Promotes GSE Reform Principles

March 1, 2019

View letter

The Real Estate Roundtable and 27 other industry organizations today submitted principles for reforming the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, which underpin the multi-trillion-dollar financial market for single-family and multifamily mortgages.

"We believe that comprehensive legislative reform, including an end of conservatorship, is ultimately necessary in order to codify structural changes that ensure safety and soundness and provide the certainty needed for private capital to establish a more reliable presence in housing finance," according to the comments.
 
The letter emphasized that compelling evidence must show the private market is capable of an expanded role before efforts are made to reduce the GSEs' current housing finance footprint. "Ultimately, we believe any reform, be it administrative or legislative, must seek to further two key objectives: 1) preserving what works in the current system, while 2) maintaining stability by avoiding unintended adverse consequences for borrowers, lenders, investors, or taxpayers."    
The coalition states in today's letter that FHFA should establish policies that ensure a continuation or expansion of: 
 
  • A liquid national market with broad and fairly-priced access to affordable credit and improved infrastructure for the single-family secondary market;
  • Support for strong and sustained liquidity in the multifamily rental market;
  • Equal secondary market access and pricing for all lenders, regardless of size or volume; and

  • The sustainable transfer of appropriate credit risk to the private sector. 

The letter also advocates that principles governing any potential administrative reforms to the GSEs should be guided by the potential impact on borrowers, taxpayers, and market structure dynamics.  Any reform that would meaningfully alter the GSEs' market presence-single-family, multifamily, or both-should also seek to maintain and enhance the stability and liquidity of the housing finance system.