Federal Housing Finance Agency (FHFA) Director Mark Calabria is aiming for privatization of Fannie Mae and Freddie Mac, and in this Video Spotlight, Calabria talks with CNBC's Diana Olick about the hurdles in the way of taking Fannie and Freddie out of conservatorship.
Calabria states that he does not intend to wait for Congress to pull Fannie and Freddie out of conservatorship. Calabria also discusses how the FHFA will need to look at other ways to build capital before pulling the GSEs, and what shareholders may or may not need to worry about in the near future.
“If I can end the sweep, reach some changes to the share of Treasury, we can get them out of conservatorship, we can start to build capital, I can start to monitor loan quality, get them in a safe and sound fashion,” Calabris stated. “There’s a lot I can’t do: I can’t create competition, I can’t create a guarantee, those are going to be in the hands of Congress. I’m going to call for those things, but Congress has to play its part.”
In another interview with the Wall Street Journal, Calabria stated that he wants to out the now-profitable GSEs 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, “they have to be stronger, healthier companies” compared to before the 2008 housing crisis.
“My objective is to get us to a spot where we don’t have to worry about the system blowing itself up,” he added
Calabria stated that he is awaiting completion of plans ordered by President Donald Trump to refashion the mortgage system, set to be completed around June.
Among Calabria’s concerns is the “qualified mortgage patch,” 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.