Enterprise Releases New White Paper on Housing Finance Reform
On Friday Enterprise released a new white paper on housing finance reform, offering specific proposals that would create a more stable, liquid and accessible system for mortgage finance that works for the full spectrum of renters and homeowners in the U.S..
The white paper comes on the heels of a recent hearing in the Senate Banking Committee on options for reforming Fannie Mae and Freddie Mac (collectively the government-sponsored enterprises or GSEs), which is expected to jumpstart a high-stakes debate in the coming months. Senior leadership in both Congress and the White House are identifying housing finance reform as a top legislative priority for 2017.
As the white paper explains, Enterprise believes that any housing finance reform effort must seek to:
- Ensure stable access to affordable single-family and multifamily credit for all eligible borrowers, both across geographies and throughout the business cycle,
- Promote broad access to sustainable homeownership for all creditworthy families, and
- Expand support for rental housing that is affordable to low- and moderate-income households.
The paper then offers five specific policy recommendations for achieving those overarching goals:
- Establish an explicit, limited and paid-for government guarantee on qualifying single-family and multifamily mortgage-backed securities, with private investors taking a loss before taxpayers.
- Preserve the current multifamily businesses at Fannie and Freddie while ensuring that those businesses continue to focus on affordable rental housing.
- Establish an annual assessment of at least 10 basis points on all government-insured, mortgage-backed securities to fund affordable housing activities.
- Ensure broad access to the mortgage market for all eligible borrowers and support small lenders and small multifamily properties, particularly those in low-income urban and rural areas.
- Preserve the dual mission of the Federal Housing Administration – promoting broad access to homeownership for low- and moderate-income families while providing countercyclical support to the market as needed – while taking steps to shore up the agency’s long-term financial health.