Housing finance reform continues to draw interest - along with a lot of different opinions on what to do next. Although this year there is no expectation that any serious run at reform of Fannie Mae and Freddie Mac will take place, the noise around this topic is getting louder. From a flurry of letters to Federal Housing Agency (FHFA) Director Mel Watt from Members of Congress and key organizations to published papers and much more, there’s no question that the debate is raging on in Washington.
Specifically, recently 32 congressional Democrats sent a letter to Director Watt calling for the recapitalization of Fannie and Freddie. Then, a bipartisan group of six senators, including recognized leaders on the reform front Ron Johnson (R-WI), Mike Crapo (R-ID), Bob Corker (R-TN) and Mark Warner (D-VA), issued their own letter to Watt stating that reform of any type should be left up to Congress. In addition, a variety of private groups and associations have sent conflicting letters to FHFA’s Watt over the past few months.
A number of papers have also been published this year calling for various ways to move forward on reform of Fannie and Freddie. They include the Urban Institute’s Housing Finance Reform Incubator project that included an in-depth essay along with concluding remarks from NMHC’s President Doug Bibby and Chairman Bob DeWitt.
And finally, this week former FHFA Director Ed Demarco and Milken Institute Director Michael Bright, a key author of the Johnson-Crapo and Corker-Warner housing finance reform bills, issued the first of a proposed series of papers outlining their recommended approaches to housing finance reform. This first paper outlined the history behind Fannie and Freddie’s conservatorship and described the good and bad of their structure. Specific recommendations on the reformed structure will be presented in one of Demarco and Milken’s follow up papers.