Affordable housing groups weighing on behalf of underserved communities are advocating for a cautious approach to the government-sponsored enterprise reform the Trump administration is pursuing.
“Any changes to the enterprises cannot raise costs on renters and homeowners,” the Underserved Mortgage Markets Coalition said in laying out one of its priorities for reform as administration officials seek input from various stakeholders.
The coalition called for the government to retain a statutory obligation on the enterprises to support housing trust and capital magnet funds aimed at boosting the supply of homes.
The UMMC also suggested the Treasury Department create “a flexible, locally-tailored affordable housing supply fund” to receive the proceeds from a potential new public offering of some of the GSEs’ shares. The fund would support affordable housing preservation and creation.
What the broader framework for reform looks like right now
Currently, the use of proceeds from a stock offering by the two GSEs which have been in government conservatorship since the Great Financial Crisis is restricted, with legislative change necessary for broader use. The GSEs buy many loans made in the United States.
“At a minimum, without any legislation, any sales of stock goes to deficit reduction and that is a value for the taxpayer,” David Dworkin, a former Treasury official and heads the bipartisan National Housing Conference, said at a recent Cato Institute Conference.
NHC is one of the members of the Underserved Mortgage Markets Coalition, which includes around 40 organizations that work to produce affordable housing in conjunction with Fannie Mae and Freddie Mac. Mark Calabria, the GSEs’ former regulator, who is currently working with the Trump administration in other roles, previously had ties to the Cato Institute.
Dworkin also has advocated for preserving the 30-year fixed-rate mortgage, which is another goal the UMMC backs.
Some other speakers at the Cato conference suggested re-thinking the product, which is offered without prepayment penalties in the United States, because while it is advantageous to borrowers, it constrains Fannie and Freddie’s ability to raise funds and manage risk.
A call to keep the focus on homeowners and renters
As government-related enterprises with a housing mission, Fannie Mae and Freddie Mac should put the consumer first, according to the coalition.
“Homeowners and renters must be at the heart of our federal government’s approach to housing finance,” said Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders, in a press release.
The NAAHL is the organization that convened the coalition.
The organizations in UMMC also called for expanded access to underserved communities as defined under the existing Duty to Serve mandate through more AH preservation, alongside rural or manufactured housing production.
The enterprises and their current regulator, Bill Pulte, have backed expansion of manufactured housing, and Freddie Mac and Fannie Mae both recently have extended financing for a form of it that has features in common with traditional homes to smaller “single-wide” structures.
The GSEs should “maintain affordable housing goals that are transparent, measurable and support meaningful access to sustainable and affordable housing for very low- and low-income households,” the coalition said.
Organizations that are part of the UMMC include the Consumer Federation of America, the Homeownership Alliance, Lincoln Institute of Land Policy, National Council of State Housing Agencies, NeighborWorks, and professional services firm Novogradac.
