Housing Policy Council Statement on Administration’s Proposal for GSE Reform

Washington, D.C. – February 14, 2011 – (RealEstateRama) — In response to the Administration’s release of its report, “Reforming America’s Housing Finance Market”, John H.  Dalton, President of the Housing Policy Council issued this statement:

“The Housing Policy Council (HPC) is pleased the Administration has officially entered the debate on reforming and strengthening the housing finance system.   The new report helps advance this vital debate in a serious manner. The Housing Policy Council is strongly in favor of reforming and strengthening the housing finance system. First, we agree with the need for an orderly and deliberate transition from Fannie Mae and Freddie Mac. The transition must be handled carefully to provide the opportunity for private capital to return to the secondary market.  At the same time, the transition must be accompanied by a plan for a new secondary market structure.

The Administration outlined three possible options for replacing the GSEs with secondary market structures that are based on the return of private capital to the market.  HPC believes that the third option in the Administration’s paper, “Privatized system of housing finance with FHA, USDA and VA assistance for low and moderate-income borrowers and catastrophic reinsurance behind significant private capital” is the most viable and realistic.  It is consistent with the fundamental reform concepts that are contained in the Housing Policy Council’s own GSE reform proposal, which was released in early 2010.  The HPC proposal, developed with the expertise of our member companies, advocates a new privately based structure that minimizes the risk to taxpayers, makes sure that private capital returns to its predominant role in housing finance, ensures that families have access to the 30-year fixed rate mortgage, helps guarantee liquidity for the market through a catastrophic backstop by the government which is the final safeguard behind many layers of private capital.

I am pleased to see the Administration is taking a serious approach to this critical issue and we think this report will enhance the reform effort. We hope to continue the discussion with Congress and the Administration on moving reform legislation forward in a deliberate but expeditious manner. The HPC urges Congress to continue the hearings it has begun and to examine these options as part of that process.  We believe that a carefully developed and managed transition from Fannie Mae and Freddie Mac to a new privately-based system that preserves access to mortgage credit for Americans seeking to purchase a home in the future is in our national interest.

The Roundtable’s Housing Policy Council is made up of thirty-two companies that are among the nation’s leaders in mortgage finance.  Member companies originate sixty-five percent of the mortgages for American home buyers. Member companies participate in the Council through the senior mortgage executive in their company.
The Roundtable and the Housing Policy Council have partnered with other industry leaders to form HOPE NOW. HOPE NOW is an alliance between counselors, mortgage market participants, and mortgage servicers to create a unified, coordinated plan to reach and help as many homeowners as possible.
Roundtable member companies provide fuel for America’s economic engine, accounting directly for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs.