{"id":1269,"date":"2021-06-30T13:19:01","date_gmt":"2021-06-30T13:19:01","guid":{"rendered":"https:\/\/www.yardimatrix.com\/blog\/?p=1269"},"modified":"2023-09-12T16:04:18","modified_gmt":"2023-09-12T16:04:18","slug":"gses-to-get-makeover-under-biden","status":"publish","type":"post","link":"https:\/\/www.yardimatrix.com\/blog\/gses-to-get-makeover-under-biden\/","title":{"rendered":"GSEs to Get Makeover Under Biden"},"content":{"rendered":"\n

With former Federal Housing Finance Agency Director Mark Calabria ousted, any plans to privatize Fannie Mae and Freddie Mac are over. The question now becomes: How will the Biden administration use the government-sponsored enterprises (GSEs) to implement its ambitious plans for the housing market?<\/p>\n\n\n\n

Calabria, who was appointed to head the agency by President Donald Trump in 2019, made no secret of his desire to shrink Fannie Mae and Freddie Mac\u2019s footprint in the multifamily lending market<\/a><\/strong> and return them to private status. With Calabria out, talk of privatization is dead, but it remains unclear exactly how the Biden administration will operate the agencies.<\/p>\n\n\n\n

Given the priority that Biden has placed on creating affordable housing and combating climate change, and his long-held ideological inclination to use the levers of government to affect policy, it seems a good bet that Fannie and Freddie will do more rather than less. \u201cThe smart bet on the GSEs is that multifamily will be able to do more volume, but with a continued mission-driven focus. It won\u2019t be a blank check,\u201d said David McCarthy, senior director of government and policy relations at the CRE Finance Council, a Washington, D.C.-based trade group.<\/p>\n\n\n\n

Some possibilities include ramping up loan production, increasing access to the correspondent program for smaller lenders, and expanding the use of loans with affordable and green components. \u201cWe\u2019re likely to see an increased focus on affordable and green lending, a review of the multifamily caps and a renegotiation of the conservatorship agreement between the Treasury Department and the FHFA,\u201d said Mike Flood, a senior vice president of commercial\/multifamily policy at the Mortgage Bankers Association.<\/p>\n\n\n\n

Potential Policy Changes<\/h3>\n\n\n\n

Calabria was removed last Wednesday after the U.S. Supreme Court released a decision on a lawsuit that said a president could fire agency heads without cause. Sandra L. Thompson, previously the FHFA\u2019s deputy director of housing mission and goals, was appointed as acting director. The court\u2019s ruling was significant because Calabria had set ambitious goals to release the GSEs from conservatorship, where they have been since being bailed out by the federal government in 2008. After he was appointed to a five-year term in 2019, Calabria ended the cash sweep that sent Fannie\u2019s and Freddie\u2019s profits to the federal treasury, the first step toward financial stability and setting them free.<\/p>\n\n\n\n

Privatization will not be an issue in a Biden administration. Instead, the questions will center around how the GSEs can be used to support the president\u2019s activist housing policy. Biden and Vice President Kamala Harris campaigned on a multi-tier plan to increase the stock of affordable housing and provide incentives for municipalities to remove barriers to construction. Some of the possibilities that would enable the GSEs to be tools for Biden\u2019s agenda moving forward include:<\/p>\n\n\n\n