Mortgage Bankers Association (MBA) President Bob Broeksmit told mortgage bankers in San Diego on Monday the Trump administration shouldn’t move too quickly to privatize the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mae.
“We’re more insistent than ever that releasing the GSEs must be done right,” Broeksmit said in prepared remarks published ahead of his speech at the MBA Commercial/Multifamily Convention and Expo.
“There’s too much at stake, and if it’s done in a rush, the results won’t be pretty,” he said.
Broeksmit said the conservatorship that began in 2008 “was never intended to be permanent” and the trade group is fully behind the idea of releasing the GSEs.
“It was always supposed to be a stopgap measure until the situation improved,” he said. “Well, that day is getting closer.”
He noted that the GSEs have been retaining capital in preparation for their release, and their regulator, the Federal Housing Finance Administration “has implemented many necessary reforms.”
Broeksmit also warned against the “HUD-ification” of the GSEs.
“We should keep them focused on their actual job of improving liquidity,” Broeksmit said. “FHFA shouldn’t micro-manage everything Fannie and Freddie do. Nor should they distract them from their core missions of providing liquidity, stability and affordability.”
Before the GSEs can be released, however, the global financial markets need an explicit government guarantee on Fannie Mae and Freddie Mac’s mortgage-backed securities, Broeksmit said. Moody’s Chief Economist Mark Zandi previously told Scotsman Guide that an explicit guarantee would require an act of Congress.
“Without it, there’s no way to ensure the liquidity through all economic cycles that supports affordable single-family and multifamily lending,” Broeksmit said.
In the speech, Broeksmit also urged the Trump administration to extend expiring tax cuts from Trump’s first term that “promote investment and real estate business stability.” These include the 1031 Like Kind Exchange, the Section 199A pass-through deduction and current the treatment of business interest deductibility for real estate.
Broeksmit called these “key levers for investment decisions that have been proven to work.”
