S&P Doesn't Expect to Change Opinion on Fannie, Freddie Anytime Soon
Jun 03, 2014 15:06:00 (ET)
The following is a press release from Standard & Poor's:
NEW YORK (Standard & Poor's) June 3, 2014--In recent weeks, U.S. federal
policymakers have sent several strong signals on their plans for providing
ongoing policy support for U.S. housing markets, Standard & Poor's Ratings
Services' said today in an article published on RatingsDirect titled "Back To
The Future: Why Fannie And Freddie Remain Key Players In U.S. Housing." One of
the most significant comments on housing finance, in our view, came from the
new director of the Federal Housing Finance Agency (FHFA), Mel Watt. In his
speech on May 13 unveiling the FHFA's strategy for Fannie Mae and Freddie Mac,
government-sponsored enterprises (GSEs) that support federal housing finance,
Watt indicated a break from previous years. In 2012 and 2013, the FHFA
indicated its main goal was to lessen the impact of Fannie and Freddie in the
marketplace, but this year, Mr. Watt has indicated that the FHFA's priority is
to instead maintain the support Fannie and Freddie provide to housing finance.
"We believe this shift will contribute to further entrenching the role Fannie
and Freddie play in U.S. housing finance and bolster their role in government
policy," said Standard & Poor's credit analyst Matthew Albrecht.
We continue to view Fannie and Freddie as having a critical role within
federal housing policy and having an integral link to the U.S. government.
Despite ongoing debate in Congress about their reform and potential wind-down,
we do not expect to change our opinion on Fannie and Freddie anytime soon. In
our view, the FHFA's latest policy stance is a meaningful change aimed at
solidifying the presence of the GSEs in the U.S. housing market and
departs--in many ways--from past years' goal of a more limited presence. We
expect the FHFA's plan to maintain Fannie's and Freddie's role will support
the housing market recovery. Finally, we expect the GSEs' financial
performance to reflect continuing fundamental improvement in the housing
market. In our view, their ability to maintain business as usual as a key cog
in U.S. housing finance will be paramount to the market's stability unless and
until broader reforms finally happen.
The report is available to subscribers of RatingsDirect at
www.globalcreditportal.com and at www.spcapitaliq.com. If you are not a
RatingsDirect subscriber, you may purchase a copy of the report by calling (1)
212-438-7280 or sending an e-mail to research_request@standardandpoors.com.
Ratings information can also be found on Standard & Poor's public Web site by
using the Ratings search box located in the left column at
www.standardandpoors.com. Members of the media may request a copy of this
report by contacting the media representative provided.
