During the financial crisis of 2008, mortgage guarantors Freddie Mac and Fannie Mae were brought into a government conservatorship. Today the White House issued a statement that calls for an “overdue reform of the housing finance system,” ending the conservatorship that protected the growing entities from any competition in the private sector.
Reform proposals will be drafted by HUD and the Treasury Department, laying out a plan to privatize the government-sponsored enterprises (GSEs) while instituting regulatory oversight. The objective is to approve additional guarantors into the secondary mortgage market, expanding the number of mortgages that can be guaranteed and reducing the risk of taxpayer-funded bailouts.
The statement claimed that outdated processes and lack of competition have exposed the HUD programs to too much risk, and that a reform would promote transparency and accountability to taxpayers.