On February 11, 2011, the Obama Administration released housing finance market guidelines for economic market recovery. The report emphasizes bringing private capital back into the market and winding down Fannie Mae and Freddie Mac's investment portfolio. Allowing the private sector to take back a portion of the market share will dilute the "risk aversion" factor and reduce government risk. "This is a plan for fundamental reform to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it," said Treasury Secretary Tim Geithner. "We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market."
Protecting consumers during this period of finance reformation is critical for full economic recovery to be possible. The plan
includes stronger consumer protection, increased transparency for investors and improved underwriting standards. National Association of Realtors (NAR) President, Ron Phipps states, "NAR believes that we cannot have a restoration of the former secondary mortgage market with entities that took private profits while pushing losses onto the taxpayer. The new system must involve some government presence, outside of FHA, USDA, and the Department of Veterans Affairs, to ensure a continued flow of capital to housing markets during economic downturns when large lenders flee the housing market." He goes on to say, "We believe there must be a certain level of government participation to provide middle-class families access to affordable mortgages at all times and in all markets." Strengthened anti-predatory lending protections, improved underwriting standards, as well as stricter mortgage disclosure requirements are part of the Adminstration's plan. The goal is to provide consumers with the best knowledge possible so that they are making sound decisions regarding mortgages.
In addition, the Administration hopes to reform and restructure the role of the Federal Housing Administration (FHA) with measures to support rental housing by offering lending options to the multi family market and programs for smaller properties. "This report provides a strong plan to fix the fundamental flaws in the mortgage market and better target the government's support for affordable homeownership and rental housing," said Housing and Urban Development Secretary, Shaun Donovan. "We must continue to take the necessary steps to ensure that Americans have access to quality housing they can afford. This involves rebalancing our housing priorities to support a range of affordable options, from promoting much-needed financing for quality, affordable rental homes to ensuring the availability of safe, and sustainable mortgage products for current and future homeowners."
Long term reform issues include determining the best course of action and careful analysis of the government's future role in the housing market. Let's hope, that going forward, the proposed finance market guidelines result in economic recovery and affordable mortgage loan options.
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Catherine Condon, Broker MA & NH
Like with all government initiative, I t will take time for me to listen what people say, before I would get any clarity
Just feels stupid at this point (LOL)
They have about as much know how at bringing the housing market back around as I would if I went and tried to fly a space mission. Its obvious that they are so out of touch with the Housing industry, they are clueless, you dont have to look any further than this new FHA MI hike and this whole loan officer compensation Mess to see THAT!!! LOL
Talk, talk, talk. The government can talk all they want about what they are going to do. In the end, what they do usually has the opposite effect. The government needs to stop trying to figure out how to fix business and stick to governing.
I read the report also. I find it interest that the issue of Fannie and Freddie were not covered by Dodd-Frank. It's a push over to the republican congress.