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MBA's Stevens: Don't overreact to Trump official

The president of the nation’s largest mortgage banking trade group said that the industry shouldn’t overreact to recent statements by Treasury Secretary-designate Steven Mnuchin that the Trump administration will move quickly to privatize Fannie Mae and Freddie Mac and make other key changes to housing finance policy.

Stevens“As the new administration takes shape, there will likely be a variety of comments made by any number of potential nominees,” Mortgage Bankers Association President David Stevens wrote in a blog Tuesday. “Keep in mind, though, policy priorities will be established by the new president and laws need to pass both the House and Senate — so it is important not to overreact to every 8-second soundbite.”

Mnuchin, a former Goldman Sachs executive and hedge fund founder, appeared last week on Fox Business News and CNBC shortly after he was picked to lead Treasury. Mnuchin told Fox Business News that privatizing the government-sponsored enterprises (GSEs) would be made a top priority of the administration. He told CNBC that Trump favors a further cap on the mortgage interest deduction, so that wealthier Americans will receive a lesser benefit. 

Stevens wrote that any attempt by the new administration to cap the mortgage interest deduction, absent comprehensive tax reforms, would be met with “fierce resistance.”

“If Congress or the administration wants to undertake comprehensive tax reform, and the president-elect and congressional leadership have clearly indicated that tax reform is a priority, a wide range of issues will be raised — including the [mortgage interest deduction] and other real estate provisions,” Stevens wrote. “But it would be a mistake to do anything that has the potential to hurt homeowners and the housing market that contributes so much to the national economy,” Stevens continued.

Stevens said MBA was encouraged that Mnuchin indicated that the Trump administration would make housing finance reform a priority. He wrote that any moves to privatize the GSEs must include a government guarantee backing the securities to ensure liquidity in the mortgage market. He further wrote that the government guarantee should be paid by private capital, and private capital should stand in the first loss position.

 “It is important to remember that this was a brief snippet of a longer interview and "privatize" could mean several things, so I think we shouldn't jump to conclusions,” Stevens wrote. 


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