On Tuesday at the National Association of RealtorsÂ®â€™ Regulatory Issues Forum, newly-appointed Federal Housing Finance Agency Director Mark Calabria spoke to hundreds of RealtorsÂ® and industry leaders regarding his vision for the future of Fannie Mae and Freddie Mac.
Tuesdayâ€™s forum also presented an opportunity for NAR to highlight its housing finance reform plan, which proposes a utility model to ensure a reliable and affordable source of mortgage capital for Americans going forward.
Bethany McLean, a contributing editor at Vanity Fair and author of â€śShaky Ground: The Strange Saga of the U.S. Mortgage Giants,â€ť moderated Tuesdayâ€™s event.Â NAR Members and Regulatory Issues Forum Chairman and Vice-Chairman Kurt Thompson and Dean Dawson were also on hand to open and close the panel.
McLean led Tuesdayâ€™s discussion with Director Calabria, diving deeper into the former NAR economistâ€™s priorities in his new role at the helm of the FHFA.
â€śOne of the things Iâ€™m going to be trying to do across the board is [determine how we] level the playing field to where all large financial institutions have similar capital,â€ť Director Calabria told the group at the Washington Marriott Wardman Park Hotel. â€ś[That will ensure] the GSEs have a good business model because they have good management and good executionâ€”not because they have lower standards than everyone elseâ€”and so we have that capital there to protect the taxpayer. At the end of the day, I think that can be done in a way that really does not adversely impact the consumer.â€ť
Perhaps most notably to many of the RealtorsÂ® in attendance Tuesday, the director said loan limits will remain untouched during his tenure at FHFA. He also assured the audience that work to preserve the 30-year mortgage remains critical.
â€śThe process of setting loan limits is very mechanical,â€ť he said. â€śItâ€™s in statute â€“ Congress decided. Thatâ€™s not my decision, so loan limits are not going to change from whatâ€™s in statute.
Still, conversations surrounding the prospects, principles and policies of the GSE reform drove Tuesdayâ€™s discussion, as they will likely drive much of Director Calabriaâ€™s 5-year term atop the FHFA. Specifically, McLean pressed on his approach to orchestrating an end to Fannie and Freddieâ€™s conservatorship.
â€śI would not feel comfortable having [the GSEs] exit conservatorship until Iâ€™m comfortable knowing that we never go back to the old days, pre-crisis, and that we have a Fannie and Freddie that are responsible, good corporate citizens that donâ€™t have the arrogance we saw before the crisis,â€ť he said.
Although unity surrounding any specific policy changes has yet to emerge in Washington, RealtorsÂ® have in hand, a ready-made, pragmatic and workable plan for housing finance reform.
â€śBecause of the GSEs, homebuyers in Springfield, Missouri and Springfield, Massachusetts have equal access to a mortgage and pay nearly identical rates,â€ť NAR President John Smaby said. â€śThatâ€™s why RealtorsÂ® have worked so hard to develop a plan that keeps our housing finance system solvent, and why weâ€™ll be able to help aspiring homeowners for decades to come.â€ť
NARâ€™s plan would transition Fannie Mae and Freddie Mac into private, shareholder-owned utilities that would continue to purchase, guarantee and securitize single-family and multifamily mortgage loans.
â€śBy retaining an emphasis on private capital, our model protects taxpayers, consumers and the U.S. economy,â€ť Smaby continued. â€śMost importantly, as utilities, Fannieâ€™s and Freddieâ€™s foremost priority would be to serve the public mission instituted by Congress â€“ to support stability, liquidity and access in the mortgage market.â€ť
The RealtorsÂ®â€™ proposal drew praise at Tuesdayâ€™s forum. â€śNARâ€™s plan for GSE Reform is the smartest we’ve heard to date,â€ť McLean, who also authored â€śThe Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron,â€ť told the crowd at Marriott Wardman Park.
As Congress and the FHFA each plan their own path toward GSE reform, Calabria and McLean highlighted some of the issues that require cooperation between the administration and legislators on Capitol Hill.
â€śI really would like to see Congress act,â€ť Calabria added. â€śThere are a number of things that I can do and will do, but the overall problem is about the model. I can get the GSEs out of conservatorship, I can make sure theyâ€™re better capitalized and better regulated, but essentially the model is the model. If there is going to be a change in the model, Congress has to do that.â€ť
For more information, visit www.nar.realtor.