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Administration Holds Conference on Housing Finance Reform

Yesterday, August 17, U.S Treasury Department (Treasury) Secretary Timothy Geithner and U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan hosted a conference on reforming the housing finance system. The focus was on what to do with the government – sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, who were put into conservatorship in September 2008 after the collapse of the housing market.

The four and a half hour conference was held at the Treasury building and was attended by key stakeholders including economists, investors, researchers and servicers. The Administration plans to use this conference as a way to collect ideas and begin building consensus in hopes of preparing a housing finance reform proposal that will be presented to Congress in January 2011. The agenda for the conference included opening remarks from Treasury Secretary Geithner and HUD Secretary Donovan. These statements were followed by two panel discussions and six breakout sessions on various topics.

One fundamental question, which has been asked since the GSEs went into conservatorship, of the event was what the role of the government should play in the future of housing finance. The answer remains uncertain. The Administration heard broad suggestions ranging from completely privatizing the system to leaving the current system in place. However, both Secretary Geithner and Secretary Donovan stated a stable and healthy housing finance system was necessary. They also mentioned that the current structure would need to change while suggesting that continued government support was important. The role of the GSEs in providing affordable housing was also a topic of conversation, with Secretary Donovan mentioning its importance in his opening statement, panel and breakout sessions.

A number of National Housing Conference (NHC) board members attended the event, and NHC will continue to stay involved in these discussions moving forward. NHC is particularly interested in the role of the GSEs within the multifamily housing market and are developing more specific recommendations on how the housing finance system could better support multifamily housing. In addition, NHC in partnership with a NHC – run working group, created a set of Ten Key Principles for repairing the mortgage market to help guide Congress and the Administration as they consider the future of the housing finance system.

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