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FHFA’s Calabria and the Future of the Mortgage Market

Video Spotlight

Fannie maeFederal Housing Finance Agency [1] (FHFA) Director Mark Calabria is aiming for privatization of Fannie Mae [2] and Freddie Mac [3]. In this video Spotlight, the Wall Street Journal discusses how restructuring the GSEs would impact America’s most popular loan: the 30-year fixed rate mortgage.

In a recent interview with the Journal [4], Calabria stated that he wants to put the now-profitable GSEs [5] back into private hands, something that has been tried and failed by lawmakers in the past.

“I see my goal as setting a path to end the conservatorship” for the companies, he said, adding that “they have to be stronger, healthier companies” compared to before the 2008 housing crisis [6].

“My objective is to get us to a spot where we don’t have to worry about the system blowing itself up,” he continued.

Among Calabria’s concerns is the “qualified mortgage patch [7],” which allows more highly leveraged homebuyers to obtain Fannie and Freddie-eligible mortgages. Patch usage has grown in the last few years, and according to Calabria, changing the patch would be a key tool to shrink Fannie and Freddie without a full overhaul, though he states that he does not intend to do away with it entirely.

“I can draw Fannie and Freddie a map,” he said. “Fannie and Freddie are going to have to be the ones who meet the mileposts.”

Calabria [8] stated that he is awaiting completion of plans ordered by President Donald Trump to refashion the mortgage system, set to be completed around June.