The GSEs remain critical to ensuring mortgage market liquidity.
On September 7, 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac (the GSEs) into
conservatorship. FHFA took this action “to help restore confidence in Fannie Mae and Freddie Mac, enhance their
capacity to fulfill their [housing] mission, and mitigate the systemic risk that has contributed directly to the
instability in the current market.” At that point, it was expected that the debate on the future structure of Fannie
Mae and Freddie Mac would begin in earnest. However, with Congress attention focused elsewhere, legislation is
not expected to be enacted until 2011 at the earliest.
Higher loan limits need to be permanent and available in all markets.
Despite the higher limits being extended through year-end 2010, their temporary nature continues to make lenders
and investors wary of supporting them. Making the limits permanent at levels appropriate in all parts of the
country will provide homeowners and homebuyers with safe, affordable financing and help stabilize local housing
markets. Currently the higher GSE limits are set to expire on December 31, 2010.
Congressional action needed:
- Enact legislation to restructure Fannie Mae and Freddie Mac (the GSEs) in a manner that provides the federalgovernment a continued role in the secondary market in order to ensure mortgage liquidity in all markets.
- Enact legislation that makes permanent the higher GSE loan limit formula and caps in order to provide affordablefinancing for all borrowers in all markets.
- The House Financial Services Committee held its first hearing on housing finance reform on March 23, 2010. TheCommittee plans to continue holding hearings throughout the year, with the hope of drafting a housing financereform proposal by year's end. NAR testified at the March 23, 2010 hearing.
- The Senate Banking, Housing, and Urban Affairs Committee held a hearing titled the "Future of the MortgageMarket and the Housing Enterprises" in October 2009. Since then, there has been no substantive discussion of theGSEs by the Committee.
- H.R. 2483, the "Increasing Homeownership Opportunities Act," to make the current GSE and FHA loan limitspermanent, has been introduced by Brad Sherman (D-CA) and Gary Miller (R-CA).
- The federal government must have a continued key role in the secondary mortgage market in order to ensurethat there is capital for mortgage lending in all mortgage markets and all market conditions.
- Support H.R. 2483, the "Increasing Homeownership Opportunities Act," to make the current GSE and FHAloan limits permanent.