Washington, DC, Sept. 11--The Bush Administration’s recommendation before Congress today would gut the Department of Housing and Urban Development’s role as our nation’s primary housing advocate by removing the agency’s current mission oversight of Fannie Mae and Freddie Mac. This move threatens to jeopardize the success of the housing finance system and undermine the vibrant housing market that has sustained the economy in recent years, according to the National Association of Home Builders (NAHB).
"The sweeping plan presented by Treasury Secretary John Snow and HUD Secretary Mel Martinez to overhaul the regulation of Fannie Mae and Freddie Mac, which provide the liquidity and stability needed to keep mortgage credit available at the lowest possible cost to home owners and rental housing providers, would severely damage the long-standing federal commitment to a ‘decent home and a suitable living environment for every American family’ outlined in the Housing Act of 1949," said Jerry Howard, executive vice president and CEO of NAHB.
While the Treasury Department would be an appropriate agency for regulating the financial safety and soundness of the nation’s two major mortgage lenders, Howard said it is imperative for HUD to retain its current status as the mission regulator for Fannie Mae and Freddie Mac, including approving new programs and establishing annual affordable housing goals.
"NAHB strongly believes that Fannie Mae’s and Freddie Mac’s ability to spur innovative solutions and to develop new products that increase homeownership will continue only if the mission of these corporations is regulated by HUD, the only cabinet agency with a thorough understanding of, and extensive involvement in housing-related issues."
The rush to judgment to enact a quick legislative fix in the wake of Freddie Mac’s accounting problems could produce catastrophic consequences for housing by transferring mission oversight of critical financial housing institutions to the Treasury Department, an agency with little experience in evaluating the effectiveness and appropriateness of housing policies, especially those pertaining to mortgages, said Howard.
"Any attempt to turn today’s congressional hearing into a referendum on the entire national housing finance system would be a grave mistake that could have severe repercussions on a well-working secondary mortgage market system," said Howard. "We disagree with those who seek changes to the risk-based capital standards for Fannie and Freddie and are encouraged by statements of the House Financial Services Committee members who are urging their fellow lawmakers to proceed in a cautious, deliberative manner before enacting legislation that could radically alter the oversight and functioning of the housing finance system."
Stripping HUD of its program approval authority for Fannie Mae and Freddie Mac constitutes a devastating attack on the mission of HUD itself by removing the agency’s ability to improve housing opportunities for America’s working families. The proposal is an administration message that housing is not a national priority.
"With the nation facing a number of housing challenges, including closing the minority homeownership gap and housing America’s workforce, the Treasury is the wrong place to put mission oversight of Fannie and Freddie," said Howard. "HUD is the cabinet agency that speaks for housing. It has 70 years of experience operating mortgage insurance programs and is best suited to evaluate new ideas and set goals for current programs. HUD must retain its leadership in housing."
