Fannie Mae (FNMA)

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Nov.21, 2014, 10:30 amPreserve Fannie and Freddie for the housing market and the middle class
Yesterday’s Senate oversight hearing on the Federal Housing Finance Agency underscored the need for thoughtful housing reforms to make sure that minority communities are being adequately served.

Since the 2008 financial crisis, the gap between minority and white homeownership has only widened and young people are less likely to become homeowners. The long-term impact of this disturbing trend could be dire.

From starting a family through retirement, an entire generation is at risk of missing out on the financial security that comes with homeownership. And families of color will face another barrier in striving for the American dream.

Already, we have seen perceptions about homeownership in communities of color change. For example, 63 percent of Hispanic homeowners now believe it would be difficult to get a home mortgage today, compared to 40 percent of the general population of owners.

The debate over the future of Fannie Mae and Freddie Mac provides a rare opportunity to reverse these trends and make responsible homeownership a possibility for those families that would benefit from it, generation after generation.

The Federal Housing Finance Agency, the regulator and conservator of Fannie and Freddie, can take the lead in seizing this opportunity and accomplishing these goals, without putting taxpayers or our economy at risk.

Fannie and Freddie now hold our best hope to ensure the future growth of the housing market and availability of 30-year, fixed-rate mortgages that are affordable for young people and people of color.

But for Fannie and Freddie to live up to these objectives, they will require capital. Director Mel Watt, who testified at yesterday’s hearing, made an important announcement last month that the FHFA will expand lending to middle-class borrowers, but building the capital necessary for the broad success of these initiatives will be impossible if Fannie and Freddie remain in “permanent conservatorship.”

Given these realities, we believe it is vital to discuss unwinding the conservatorship in a way that allows Fannie Mae and Freddie Mac to start rebuilding their capital. Before this can be done, significant reforms will be needed to safeguard our economy and taxpayers, and to ensure that these two mortgage giants fully and fairly serve all communities. But in our rebounding economy, it is clear that Fannie and Freddie can be profitable entities that continue to deliver a large return on the government’s investment.

The recent proposals in Congress to discard Fannie and Freddie entirely would simply pose too great a risk to our economy, our housing market, and millions of striving American families. Thoughtful reform, with an eye toward protecting taxpayers and making sure all communities are served, can resolve remaining concerns without destabilizing the American economy with an untested new system. With Congress unlikely to move forward with a complete overhaul, it is time to consider how we can make the most of the housing finance system that currently exists.

http://thehill.com/blogs/congress-blog/economy-budget/224893-preserve-fannie-and-freddie-for-the-housing-market-and-the