Attention Home Buyers, Shareholders, & The Entire Real Estate Ecosystem

Why is conservatorship so important?

Fannie Mae and Freddie Mac are two government-sponsored enterprises (GSEs) that play a pivotal role in the U.S. housing finance system. They buy mortgages from lenders, package them into securities, and sell them to investors. This process helps ensure that banks have enough funds to lend to homebuyers at affordable interest rates.

What is the Conservatorship of Fannie Mae and Freddie Mac?

The conservatorship of Fannie Mae and Freddie Mac began in 2008 during the financial crisis. Facing significant losses due to their exposure to high-risk mortgages, the U.S. government stepped in to prevent their collapse, which could have severely destabilized the global financial system. The Federal Housing Finance Agency (FHFA) was appointed as the conservator to oversee and direct the operations of Fannie Mae and Freddie Mac, essentially giving the government control to stabilize their finances and operations.

Why Does It Need to End?

The conservatorship was intended as a temporary measure to stabilize the housing market. However, it has lasted for over a decade, raising concerns about the prolonged government control over these entities and the lack of private capital in the housing finance system. Critics argue that this indefinite conservatorship stifles competition, innovation, and efficiency in the housing finance market. Furthermore, it places a significant financial risk on taxpayers, who would potentially bear the cost of any future bailouts.

Ending the conservatorship is seen as a step towards restoring a more competitive and resilient housing finance system, reducing taxpayer risk, and encouraging private investment. It’s also about redefining the government’s role in the housing market to one that sets and enforces regulations rather than directly participating in the market.

Who is Responsible?

The responsibility of ending the conservatorship falls primarily on the federal government, specifically the FHFA, the U.S. Department of the Treasury, and Congress. The FHFA, as the regulator and conservator, plays a crucial role in preparing Fannie Mae and Freddie Mac for a return to private ownership, ensuring they are financially viable and capable of serving their mission without government support. Congress may also need to enact legislation to facilitate this transition and redefine the regulatory framework governing Fannie Mae and Freddie Mac.

Call to Action for the American People

It’s essential for the American people to engage with this issue, as it affects housing affordability, the availability of mortgage credit, and the overall stability of the housing market. By staying informed, voting for representatives who prioritize reforming the housing finance system, and advocating for transparent and responsible policies, citizens can play a crucial role in shaping the future of Fannie Mae and Freddie Mac. Public pressure and advocacy can encourage policymakers to take the necessary steps to end the conservatorship responsibly and ensure a stable, accessible, and fair housing finance system for all Americans.