The future of housing finance giants Fannie Mae and Freddie Mac resurged as a hot topic on Capitol Hill recently as key committees in both the Senate and the House held hearings on the issue on March 19. The tenor of the hearings suggests that Congress could move expeditiously on GSE reform in the months ahead.
The Senate Committee on Banking, Housing and Urban Affairs held a hearing on “Bipartisan Solutions for Housing Finance Reform.” While much of the hearing focused on fixing the issues with the government sponsored enterprises’ (GSEs) single-family loan portfolio, several senators also highlighted Fannie and Freddie’s role in the multifamily mortgage system.
Committee Chairman Tim Johnson (D-S.D.) said, “I am not interested in creating a system in which homeownership is only available to the few and most fortunate. We must find workable solutions that preserve the option of sustainable homeownership for future borrowers and provide adequate financing for multifamily construction for those who prefer to rent or cannot afford to own a home.”
The same day, Federal Housing Finance Agency Director Edward J. DeMarco testified before the House Financial Services Committee during the hearing, “Sustainable Housing Finance: An Update from the Federal Housing Finance Agency on the GSE Conservatorships.” Again, the hearing focused mostly on single-family mortgage issues; however, DeMarco acknowledged that “each Enterprise’s multifamily business has weathered the housing crisis and generated positive cash flow.”
The hearing was a follow-up to the FHFA’s March 4 release of its 2013 strategic plan for the GSEs, which included a provision that would require Fannie and Freddie to reduce their multifamily lending by 10 percent.
Committee Chairman Jeb Hensarling (R-Texas) indicated his eagerness to move more aggressively forward with reform legislation. He said, “I am determined that this hearing will be the last time that Director DeMarco-or if you believe press reports, his successor-will testify before this committee before we finally and belatedly mark up a true GSE reform legislation. This I define as legislation to once and for all abolish Fannie Mae and Freddie Mac as government-sponsored enterprises ...”
Hensarling included NMHC/NAA’s GSE reform white paper in the hearing record. The committee has a series of hearings planned for the spring on a variety of housing finances issues.