HUD recently issued a press release outlining the Obama Administration’s plan to reform US housing finance. According to HUD the plan, entitled “Reforming America’s Housing Finance Market”, its stated objectives are the winding down Fannie Mae and Freddie Mac and help to bring private capital back to the market.
The Administration’s plan proposes to achieve these objectives by phasing in the following changes:
- Increase Pricing at Fannie Mae and Freddie Mac
- Reduce Conforming Loan Limits
- Increase Down Payment Requirement to 10 Percent
- Return FHA to its Traditional Role
This economic approach seeks to widen the margin in which private capital companies can compete for mortgage business by tightening lending requirements and increasing costs on government loans.
The proposal signals a desire on the part of the federal government to limit public-sector risk and to increase regulation. However, it is too early in the legislative process to reliably predict the extent to which any of these changes will be implemented.
In coming weeks you can expect to hear more on housing finance reform as mortgage and real estate sectors perform their analyses of the proposal.
Stay tuned… CR
Resources:
The Plan: "Reforming America's Housing Finance Market"
