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Housing Project, Trending News

Trump Administration Unveils Plan to Revamp The Housing Market

Proposal would release Fannie Mae and Freddie Mac from government control

The Trump administration released a sweeping plan Thursday that could remake the U.S. housing market, starting with ending more than a decade of government control of two massive companies, Fannie Mae and Freddie Mac, that back half of the nation’s mortgages.

The long-awaited plan from the Treasury Department features nearly 50 proposals, including many technical changes to financial regulations, and is aimed at shrinking the government’s role in the housing market. The cornerstone of the plan would resolve the fates of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, which 11 years ago this week were put into government conservatorship during the global financial crisis.

The proposals will “protect taxpayers and help Americans who want to buy a home,” Treasury Secretary Steven Mnuchin said in a statement. “An effective and efficient federal housing finance system will also meaningfully contribute to the continued economic growth under this administration.”

Fannie Mae and Freddie Mac play a critical part in the housing market, buying mortgages from lenders, then packaging them into securities to sell to investors. The government seized control of both companies in 2008 as the housing market unraveled and the firms’ losses piled up.

The housing giants back half of the United States’ mortgages, and housing experts have warned that allowing them too much freedom again could lead to higher mortgage costs for consumers while enriching Wall Street investors.

“President Trump’s housing plan will make mortgages more expensive and harder to get. I’m urging the president: Make it easier for working people to buy or rent their homes, not harder,” said Sen. Sherrod Brown (D-Ohio), the ranking Democrat on the Senate Banking Committee.

Fannie Mae and Freddie Mac represent the last major unresolved business from the financial crisis, and Mnuchin has called them a top priority for more than two years. Under the plan, they would be turned back into private companies but would be required to pay taxpayers a fee for government protection. It would also open the market up to competitors for the first time.

While Democrats and Republicans support ending government control of the companies, several other plans have stalled in Congress. President Barack Obama’s administration shied away from the topic, fearful that a wrong move could disrupt the housing market and the availability of 30-year mortgages.

A senior Treasury Department official said that while the administration’s plan was extensive, the changes are designed to be “incremental and realistic.”

Source: washingtonpost

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