By David Stevens
Today the US Government Accountability Office released a report titled, Prolonged Conservatorships of Fannie Mae and Freddie Mac Prompt Need for Reform. We are including a link to the report here.
What it says: The report focuses on the risks of keeping the GSEs in conservatorship and cites increased risk taking by the entities. They specifically reference reduced credit standards and a large increase in non bank lenders who GAO states as lacking oversight.
What it recommends: The GAO calls for Congress to implement legislation to end the conservatorship but to also go further and look at all the forms of government supported housing finance including FHA and VA. It asks Congress set goals for the legislation before drafting content.
Why this matters: This report comes on the heels of statements made recently by Acting FHFA Director Joe Otting, Treasury Secretary Mnuchin and other administration officials stating that a plan for ending the conservatorship is soon to be released. Add to that the confirmation process of FHFA Director nominee Mark Calabria is about to start and I am told that there have been conversations between the Senate Republicans and the Administration to prioritize this confirmation process. And finally new leadership at both GSEs only adds to the reality that the topic of the future state of the GSEs is very much on the table this 2019 year.
David H. Stevens, CMB, is Senior Advisor at Mortgage Media, and former SVP of Single Family at Freddie Mac, former EVP at Wells Fargo Home Mortgage, former President and COO of the Long and Foster Realty Companies, former Assistant Secretary of Housing and FHA Commissioner, former CEO of the Mortgage Bankers Association