High Stakes Looming in GSE Overhaul

The Wall Street Journal writes that Congress is once again gearing up to tackle reform of Fannie Mae and Freddie Mac in 2018. Noting that the basic objectives of ending the federal government's conservatorship of the two GSEs while maintaining accessible mortgage credit remain in place, the article states that there are a number of unanswered questions before policy-makers, investors, and market participants. These include the future financial backstop for the GSEs, which mortgages will qualify for a government guarantee, the capital treatment afforded to government-backed MBS, and what will happen with existing shares of Fannie and Freddie. Finally, the article notes the political difficulties in passing such legislation.

SFIG remains committed to supporting comprehensive GSE reform that prioritizes principles of fair play and competition, and creates a level playing field between the private sector and government-supported funding entities. SFIG supports the continued existence of the 30-year fixed rate mortgage, a deep and liquid TBA market, and appropriately targeted and transparent affordable housing initiatives. To participate in SFIG's GSE Reform Task Force, please contact William.Innes@SFindustry.org.

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