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Five industry trade groups have expressed their concern to Federal Housing Finance Agency (FHFA) Director Mel Watt that any reforms to the secondary market should originate in Congress and not in his regulatory agency.
In a letter to Watt, the trade groups—the American Bankers Association (ABA), Mortgage Bankers Association (MBA), National Association of Home Builders (NAHB), National Association of Realtors (NAR) and National Housing Conference (NHC)—assigned responsibility to Capitol Hill, noting that a continuation of the federal conservatorship for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac cannot be indefinitely sustained.
“Our collective push for comprehensive reform is to ensure that any changes maintain the ongoing sustainability of the housing finance system and directly benefits consumers, rather than the balance sheets of private companies,” the letter said. “A piecemeal approach to reform through further amendments to the Preferred Stock Purchase Agreements (PSPAs) will not resolve these issues. The PSPAs do not replace the need for a permanent solution to housing finance reform. However, they do provide an adequate backstop to allow Congress to complete the last piece of unfinished business from the financial crisis. Detours from this long-term goal would be counterproductive. The real priority is comprehensive housing finance system reform—it is the only way to protect against another crisis.”
Nonetheless, the trade groups praised Watt for his FHFA and his focus on bringing a resolution to the issue.
“We strongly agree with the view you expressed in your February speech that Congress needs to ‘engage in the work of thoughtful housing finance reform before we reach a crisis of investor confidence or any other kind of crisis,’” the letter continued. “We appreciate the opportunity to continue to work with you in whatever way we can to ensure that consumer access and liquidity are at the forefront of this effort.”