President Obama laid plans Tuesday for the future of housing finance in the U.S., including the wind down of Fannie Mae and assistance for more refinancing options for American families.
“Thanks to the grit and resilience of the American people, we’ve cleared away the rubble from the financial crisis, and begun to lay a new foundation for stronger, more durable economic growth,” Obama said in a speech delivered in Arizona. “But as any middle-class family will tell you, we’re not where we need to be yet.”
The President stated his support of winding down Fannie Mae and Freddie Mac.
“For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was “heads we win, tails you lose.” And it was wrong,” President Obama said. “The good news is that there’s a bipartisan group of Senators working to end Fannie and Freddie as we know them.”
The plan also includes the return of private capital in the mortgage market as well as strengthening the Federal Housing Administration and preserving the 30-year fixed-rate mortgage.
Housing industry participants applauded the efforts following the announcement with the Mortgage Bankers Association.
“Of particular importance is the President’s insistence on transitioning the mortgage market toward a future state that will rely primarily on private capital, while at the same time ensuring sufficient liquidity and the availability of the affordable 30 year fixed rate mortgage, and mortgages that finance multifamily rental housing, in both good and bad times, through an appropriate use of a government guarantee,” said MBA President and CEO David Stevens.
Homebuilders, too, stated support for the plans.
“Among other reforms, the nation’s home builders also support strengthening the FHA to facilitate the flow of mortgage credit to qualified home buyers, cutting red tape and easing tight credit conditions that are preventing creditworthy borrowers from obtaining home loans, and supporting the Low Income Housing Tax Credit to ensure the availability of safe and affordable rental housing,” said National Association of Home Builders Chairman Rick Judson.
Written by Elizabeth Ecker