Rebuilding Housing Finance: The Next Steps
How will housing finance evolve amid regulatory change and the challenges of achieving large-scale reform legislation? Incremental changes are taking place, with risk transfer transactions by Fannie Mae and Freddie Mac bringing some private capital back into housing finance, while new capital requirements for Private Mortgage Insurers (PMI) further protect taxpayers. Still, a revival of private label securitization for mortgages not guaranteed by taxpayers remains a work in progress. At the same time, policymakers have focused on expanding access to credit through approaches that include a return to mortgages with low down payments and reducing insurance premiums at FHA and possibly the GSEs. The housing finance system is thus evolving even while Fannie and Freddie remain linchpins of the system and increasingly consolidated as government-controlled entities. This panel will assess the current state of the housing finance system and the impact of evolutionary changes under way on the housing industry, home buyers, and taxpayers.