WASHINGTON—President Trump has issued a presidential memorandum initiating reforms to the housing finance system.
In a release summarizing the memo, the White House said the two primary goals are:
- Promote competition and protect taxpayers: The reforms will aim to end the conservatorship of GSEs Fannie Mae and Freddie Mac in addition to promoting competition and protecting taxpayers against bailouts, the White House said. Trump is directing the Treasury Department to prepare a reform plan for the GSEs, and the Department of Housing and Urban Development (HUD) to prepare a reform plan for the housing finance agencies it oversees. The president said he wants to work with Congress on a comprehensive solution.
- Help people achieve the American Dream: The reforms will help more Americans achieve homeownership by improving access to sustainable mortgages, preserving the 30-year fixed-rate mortgage and increasing access to federal programs to help finance first-home purchases, according to the White House.
Alignment With Principles
NAFCU noted that many of the provisions within Trump's memo align principles it has been touting, including maintaining the cash window and establishing capital requirements for the government-sponsored enterprises (GSEs).
"A healthy secondary mortgage market is of the utmost importance to Americans, and we support efforts by the Trump administration to reform our housing finance system in a way that promotes competition and puts an end to taxpayer bailouts," said Dan Berger, NAFCU president and CEO, in a statement. "To this end, NAFCU will continue to push for legislative measures to guarantee access to the secondary mortgage market for lenders of all sizes, loan pricing at the GSEs that is based on quality not quantity, and the establishment of an explicit government guarantee at the GSEs to provide certainty in the marketplace. To protect taxpayers and the safety and soundness of the housing finance system, the GSEs also should be permitted to rebuild capital."
Full memo details, including specific instructions for Treasury and HUD in their reform efforts, are available here.