The watchdog for the companies that back about half of outstanding U.S. mortgages is looking for guidance on its oversight of the so-called government-sponsored enterprises, including how to set them free after 12 years of conservatorship.
That goal, a priority of the Trump administration, is mentioned twice in the short notice issued on Tuesday. If former Vice President Joe Biden wins the Nov. 3 presidential election, as the polls show him poised to do, the plans for the future of the companies likely would change to something resembling a public utility, with a cap on profits.
“The goals and milestones laid out in the plan ensure that that FHFA’s supervision is strong, well executed and fulfills all statutory requirements, including ending the conservatorships of the enterprises responsibly,” Mark Calabria, FHFA director, said in the statement.
Calabria appeared on Capitol Hill last week and was grilled by lawmakers who questioned his plans to recapitalize and release Fannie Mae and Freddie Mac. The FHFA decision last month to place an adverse-market fee on refinanced loans delivered after Dec. 1 is part of the effort to raise capital.
Rep. Brad Sherman (D-CA) said during his questioning of Calabria that he thinks the two GSEs should be government agencies, not private companies that might raise fees to boost profits for shareholders. Several Democrats have said the companies should remain as they are during the pandemic and then be released using a public-utility model that would keep mortgage rates lower.
PIMCO, the biggest private-market buyer of Fannie Mae and Freddie Mac securities, three weeks ago sent a letter to the FHFA saying that ending the federal conservatorship of the GSEs without Congressional input would constrict housing-finance credit and boost mortgage rates.
Calabria has been moving full steam ahead, even amid the worst public health crisis in more than a century, to release the companies from conservatorship. He told Congress during his testimony that it’s his duty, under the statute that authorized the federal seizure of the companies during the financial crisis in 2008.
“The statutory framework is that you either fix them and they exit or they go into receivership,” Calabria told lawmakers. “I know it’s often characterized as being somehow my objective to get them out of conservatorship, but that’s just not accurate. I’m just carrying out the law.”
The feedback is due by Oct. 5 and should be submitted via www.FHFA.gov., the agency said.
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