{"id":5768,"date":"2019-10-07T07:28:26","date_gmt":"2019-10-07T11:28:26","guid":{"rendered":"https:\/\/dankrell.com\/blog\/?p=5768"},"modified":"2021-11-23T16:49:25","modified_gmt":"2021-11-23T21:49:25","slug":"housing-finance-reform-time","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2019\/10\/07\/housing-finance-reform-time\/","title":{"rendered":"Housing Finance Reform Time"},"content":{"rendered":"\n
\"housing<\/a>
Mortgage process <\/figcaption><\/figure><\/div>\n\n\n\n

Earlier this year<\/a>, President Trump released a memorandum indicating the need to reform the current structure of housing finance.\u00a0 Although some believe this initiative is a distraction, the reality is that housing finance reform has been in the government sights for years.\u00a0 In fact, the current state of mortgage markets was only meant to be a temporary fix after the financial crisis of 2007<\/a>.\u00a0 <\/p>\n\n\n\n

Housing finance reform has been a popular political subject\nfor years.  Even before the financial\ncrisis that resulted in the Great Recession, housing finance reform was front\nand center as a means to increase homeownership.  However, it wasn\u2019t until after the financial\ncrisis that touched off in late 2007 that Congress saw the need to make immediate\nmajor reforms to the mortgage industry. \nAlthough a strategy was mapped out, not everyone agreed on the\nplan.  <\/p>\n\n\n\n

One of the first steps taken by Congress was passing\nthe bipartisan Housing and Economic Recovery Act of 2008<\/em> (HERA).  The\npurpose of HERA was to be a comprehensive attempt addressing the identified\nproblems and concerns (at that time) that caused the financial crisis.  HERA\ncreated the Federal Housing Finance Agency (FHFA) to provide oversight of the Government\nSponsored Entities (GSE).  Among the\ngoals set by HERA was to \u201cmodernize\u201d FHA and reduce Fannie and Freddie\u2019s role\nin mortgage markets.  The fate of Fannie\nand Freddie has been debated ever since. \n<\/p>\n\n\n\n

The subsequent government takeover of Fannie and Freddie all but froze out any private participation in the mortgage markets.\u00a0 A 2010 CBO repor<\/a>t indicated that 90 percent of all mortgages were owned by Fannie Mae, Freddie Mac, and Ginnie Mae.\u00a0 Some estimate government\u2019s involvement has been much higher when including FHA and VA loans.\u00a0\u00a0\u00a0 <\/p>\n\n\n\n

Fast forward to March 27th<\/sup> 2019, when\nPresident Trump issued a memorandum on the urgency of housing finance\nreform.  Although the memorandum provides\na rationale to change the system, the timing couldn\u2019t be any more ideal (to\nhelp a seemingly plateaued housing market). \nThe President\u2019s push for reform acknowledges the dominant role of the\nGSE in mortgage markets without much competition from the private sector.  The plan is to reduce taxpayer risk by\nexpanding the private sector\u2019s role.  Furthermore,\nthe goal is to \u201cmodernize government housing programs, and make sustainable\nhome ownership for American families [our] benchmark of success.\u201d<\/p>\n\n\n\n

On September 5th<\/sup>, the Treasury Department submitted its plan<\/a> on housing finance reform.\u00a0 The pan<\/a>, as described by a Treasury press release (Treasury Department Submits Housing Reform Plan to President<\/em>; treasury.gov) \u00a0\u201cincludes nearly 50 recommended legislative and administrative reforms to define a limited role for the Federal Government in the housing finance system, enhance taxpayer protections against future bailouts, and promote competition in the housing finance system.\u201d<\/p>\n\n\n\n

Although the result of HERA was a government\nmonopolized housing finance industry, it was not the intention.  Housing finance reform means returning to a\ncompetitive market that includes the private sector.  However, it does not imply the end to\ngovernment participation.\n\nPrior to the financial\ncrisis, the competitive mortgage industry helped a record number of home buyers\nachieve homeownership.  Reforming housing\nfinance markets is key in returning to a stable and reliable housing market\nacross all sectors and price points. \nHousing finance reform will increase homeownership opportunities for\nthose who have struggled with the prospect of buying a home.  And of course, home sellers will benefit from\nincreasing numbers of home buyers entering the housing market. \n\n\n\n<\/p>\n\n\n\n

Original article is located at https:\/\/dankrell.com\/blog\/2019\/10\/07\/housing-finance-reform-time\/<\/p>\n\n\n\n

By Dan Krell
Copyright\u00a9 2019<\/p>\n\n\n\n

If you like this post, do not copy; instead please:
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\"Protected<\/a><\/figure>\n\n\n\n

Disclaimer<\/a>.\n This article is not intended to provide nor should it be relied upon \nfor legal and financial advice. Readers should not rely solely on the \ninformation contained herein, as it does not purport to be comprehensive\n or render specific advice. Readers should consult with an attorney \nregarding local real estate laws and customs as they vary by state and \njurisdiction. Using this article without permission is a violation of \ncopyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

Earlier this year, President Trump released a memorandum indicating the need to reform the current structure of housing finance.\u00a0 Although some believe this initiative is a distraction, the reality is that housing finance reform has been in the government sights for years.\u00a0 In fact, the current state of mortgage markets was only meant to be … <\/p>\n

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