Treasury, HUD Release Housing Finance Reform Plans

The Treasury Department yesterday released the Trump Administration’s plan to reform the government’s housing finance system which proposes to remove Fannie Mae and Freddie Mac from federal control. The Department of Housing & Urban Development (HUD) also released its plan for housing finance reform.

Treasury's Housing Reform Plan features specific legislative and administrative recommendations, including:

  • Creating an explicit catastrophic government guarantee on mortgage-backed securities issued by government-sponsored enterprises (GSE’s) Fannie Mae and Freddie Mac;
  • Giving the Federal Housing Finance Agency (FHFA) more discretion on regulatory capital requirements;
  • Chartering new guarantors to compete with GSEs;
  • Letting expire the CFPB's qualified mortgage patch;
  • Replacing the GSEs' statutory affordable housing goals with "more efficient, transparent, and accountable" programs; and
  • Having the FHFA work with bank regulators to address the "potentially unwarranted gap" between tough capital rules for banks that hold and service mortgages, and the less stringent ones for the GSEs.

Key provisions within HUD's Housing Finance Reform Plan include:

  • Strengthening Federal Housing Administration (FHA) programs for single-family borrowers;
  • Providing more regulatory certainty to FHA lenders;
  • Establishing FHA as an autonomous corporation within HUD;
  • Modernizing FHA technology;
  • Using Ginnie Mae's authority to end loan "churning"; and
  • Guaranteeing fee-setting flexibility for Ginnie Mae.
  • CUNA and the state leagues continue to press Capitol Hill lawmakers to ensure that any housing finance reform scheme preserves credit unions’ access to a viable secondary mortgage market. The issue has been front and center during the NJCUL’s in-district meetings with members of New Jersey’s congressional delegation.