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The Community Home Lenders Association has called for suspension of federal limits on the loan volumes that Fannie Mae and Freddie Mac can purchase from individual lenders. The demand came on the same day that the Biden administration fired FHFA Director Mark Calabria and started the process of nominating his successor.
For two decades, Alfred Pollard served as the general counsel for Fannie Mae and Freddie Mac’s regulator. He had a front-row seat for the establishment of the Federal Housing Finance Agency, the government’s subsequent seizure of the mortgage giants amid mounting losses in 2008 and the more recent legal dispute over the FHFA’s authority.
Sen. Pat Toomey of Pennsylvania, the Banking Committee's top Republican, is talking up the prospects of a bipartisan deal to overhaul Fannie Mae and Freddie Mac. But Democratic leaders sound less motivated to change the status quo for the government-sponsored enterprises.
In its final days, the Trump administration imposed limits on Fannie Mae and Freddie Mac’s holdings of mortgages with loan-to-value ratios above 90% and certain other characteristics. Critics say the changes were unnecessary and disproportionately penalize borrowers of color.
The administration faces a slew of immediate financial policy tasks, such as passing a new round of small-business aid, charting a course for Fannie Mae and Freddie Mac and filling vacant agency leadership posts.
The FHFA and Treasury will allow Fannie Mae and Freddie Mac to hold more capital as part of the Trump administration's plans to release the companies from conservatorship. But it is unclear whether the incoming Biden administration will keep the mortgage giants on the same reform path.
The agency that supervises Fannie Mae and Freddie Mac has pushed for revising an agreement with the Treasury Department allowing the mortgage giants to retain their profits. A deal could be out of reach once Joe Biden takes office.
The top Democrats on the House and Senate banking committees urged the Trump administration to pull the plug on any steps to overhaul Fannie Mae and Freddie Mac with the pandemic still taking a toll on the economy.
The proposal would require the government-sponsored enterprises to craft resolution plans similar to regulations imposed on the largest U.S. banks.
The former FDIC chief oversaw the resolution of hundreds of failed banks during the financial crisis and knows how to build relationships with regulators. Those skills could be crucial in helping Fannie exit federal control.
With a Democrat set to take the White House in January, the agenda for agencies like the CFPB could undergo a rapid transformation, housing finance reform could be turned on its head and progressive banking ideas that were unthinkable over the past four years could gain traction.
Legislation favorable to the industry would be unlikely to pass in a divided Congress, but the biggest benefit for banks and credit unions of Republicans' retaining control of the chamber would be defending against the disruption of a Democratic blue wave.
The Federal Housing Finance Agency's proposal could undermine the companies’ mission to support the housing market and penalize consumers in underserved communities, industry and consumer groups say.
If Trump is reelected, his administration would likely move forward with privatizing Fannie Mae and Freddie Mac and relaxing key rules, while a Joe Biden presidency would likely try to expand homeownership access and borrower protections.
In a letter to Director Mark Calabria, 17 organizations requested an additional 60 days to weigh in on the proposal meant to strengthen Fannie Mae and Freddie Mac's balance sheets post-conservatorship.
As they prepare to exit government conservatorship, Fannie Mae and Freddie Mac have enlisted the investment banks to help them boost capital and evaluate market opportunities.
The FHFA’s proposal is intended to strengthen Fannie Mae and Freddie Mac, but many experts warn that it could boost guarantee fees for lenders that they say may be passed on to borrowers.
The FHFA looks to shed light on the amount of funds Fannie and Freddie will need to hold for their risk-sharing deals.
The firm also predicts that the coronavirus pandemic will delay the GSEs' release from government control.
Some observers wonder if proposed regulatory targets for Fannie Mae and Freddie Mac will stoke concerns about low shareholder returns. But others suggest those fears are unfounded.
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