President Trump ordered the Treasury Department and other agencies to draft proposals to reform the federal housing-finance giants Fannie Mae and Freddie Mac, saying they pose too much risk for taxpayers.
In a memo titled “Fixing Obama’s mistakes,” The White House said Mr. Trump intends to fix the federal housing finance system “to help Americans who want to buy a home.” It said the president’s action “aims to preserve the 30-year fixed-rate mortgage.”
The president said the housing finance system has been “in urgent need of reform” since the financial crisis of 2008, when the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) received $191 billion in a taxpayer bailout and were placed into conservatorship.
Mr. Trump said the two entities remain “the dominant participants in the housing finance system and lack real competitors.”
“The lack of comprehensive housing finance reform since the financial crisis of 2008 has left taxpayers potentially exposed to future bailouts, and has left the federal housing finance programs at the Department of Housing and Urban Development potentially overexposed to risk and with outdated operations,” the president said in his order.
“It is time for the United States to reform its housing finance system to reduce taxpayer risks, expand the private sector’s role, modernize government housing programs, and make sustainable home ownership for American families our benchmark of success.”
Mr. Trump’s order directs Treasury Secretary Steven T. Mnuchin to develop administrative and legislative proposals as soon as possible to ending the conservatorships, promote competition in the housing finance market, establish regulations of the entities to ensure their financial soundness and minimize the risk to taxpayers, and ensure that the federal government “is properly compensated” for any support it provides to the entities or the secondary housing finance market.