A reform plan for the housing finance system will begin with the “relevant agencies” developing a plan to end the conservatorship of government-sponsored enterprises (GSEs) and promoting competition that “encourages sustainable homeownership and protects taxpayers against bailouts,” a memo signed Wednesday by President Donald Trump states.
In the memo, Trump proposes ending the conservatorship of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) – but leaves the details of a reform plan up to Treasury and the Department of Housing and Urban Development (HUD).
According to the memo, in addition to taking the companies out of conservatorship (where they have been held since 2008), the departments are directed to develop a reform plan that will “promote competition in the housing finance market and create a system that encourages sustainable homeownership and protects taxpayers against bailouts.”
More specifically, Trump calls for Treasury to prepare a reform plan for Fannie Mae and Freddie Mac and for HUD to prepare a reform plan for the housing finance agencies it oversees.
“Reform plans (are) to be submitted to the President for approval as soon as practicable,” the memo states.
According to the White House, the memo “aims to preserve the 30-year fixed-rate mortgage.”
Congress is also mentioned: “Critically, the Administration wants to work with Congress to achieve comprehensive reform that improves our housing finance system,” the memo states.
Congress must pass legislation to enact any reform plans into law.