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Trump faces tough path to Fannie Mae, Freddie Mac overhaul

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BY SYLVAN LANETWEET SHARE EMAIL

President Trump's quest to revamp the federal housing finance system faces long odds, with Congress tied up with a slew of must-pass bills ahead of 2020 and the two parties sharply divided over how to address the issue.
The administration's first test comes Tuesday, when top officials will appear before the Senate to explain and defend their plan to end the federal government's control over two pillars of the U.S. housing finance system.
Lawmakers have struggled for more than a decade to release the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, better known as Fannie Mae and Freddie Mac, from Washington's control.
The two government-sponsored enterprises purchase mortgages from banks, package them into bonds and sell those bonds to help fund home loans for buyers in areas underserved by private firms.

Industry critics of the system say it distorts lending markets and encourages risky mortgage loans with U.S. taxpayers as the backstop. Trump-appointed regulators have laid out a path to privatize Fannie and Freddie and have promised to act even if Congress doesn't.
Even so, much of the administration's plan depends on lawmakers reaching agreements on some of the stickiest points of reforming a housing finance system forged during the financial crisis and frozen in amber since.
While there is wide bipartisan agreement that federal housing policy is in dire need of reform, Congress lacks consensus with the 2020 presidential election approaching.

"It is wildly optimistic to think that this Congress will act on any of the suggestions directed toward it," wrote Thomas Wade, director of financial services policy at the American Action Forum, a right-leaning think tank.
"These detailed and numerous recommendations represent a tall order for a divided Congress, particularly in the run-up to an election," Wade added.
The Trump administration's push to complete what is often called the unfinished business of the 2007 to 2008 financial crisis comes amid a frantic time for Washington and the nation's politics at large.

https://thehill.com/policy/finance/460615-trump-faces-tough-path-to-fannie-mae-freddie-mac-overhaul?amp