Areas of Alignment for Administrative Reform
September marked the 10th anniversary of the GSEs being placed into conservatorship and there is growing recognition that Congress may not be able to tackle the complex issue of housing reform until 2019 or perhaps even later. But not all aspects of housing reform need to wait for action by Congress. USMI has produced the following white paper to assist the Trump Administration, particularly the Department of Treasury and the independent Federal Housing Finance Agency (FHFA), in identifying the key areas where the Administration should focus its efforts and specific steps the Administration can take to put the housing finance system on a more sustainable path. USMI provides specific recommendations to:
- Reduce the duopolistic market power of the GSEs
- Increase transparency
- Expand private capital and reduce taxpayer risk
- Promote a strong regulator that establishes uniform standards and uses transparent processes to assess the GSEs’ activities and products
While reforming the GSEs and putting the housing finance system on a more stable, sustainable path is the primary focus of this paper, it is essential that reform is not done in a vacuum. True housing finance reform should also address the Federal Housing Administration (FHA) and dynamics between private and government-insured lending channels to balance taxpayer protection with access to mortgage finance. Actions taken under Administrative reform could further reduce taxpayer risk, level the playing field between the GSEs and private market participants, and provide greater transparency regarding GSE pricing and practices. Further, Administrative reforms could be the catalyst needed to break the legislative logjam and enable Congress to enact comprehensive housing reform legislation.
The full paper can be downloaded here. Below, USMI has outlined 11 key takeaways for policymakers to consider when contemplating the future of housing finance. A PDF of these recommendations can be downloaded here.