Priority Is To Return Fannie Mae And Freddie Mac To The Private Market

According to national news sources, President Donald Trump has issued an order for the government to end its 10 year conservatorship of the mortgage companies Fannie Mae and Freddie Mac.

The mortgage companies were placed under government control in September 2008 after the bursting of the housing bubble triggered a financial crisis that put the government-sponsored enterprises (GSEs) on the verge of failure.

Deciding the fate of Fannie and Freddie, which stand behind about $5 trillion in home loans, is the biggest outstanding issue from the 2008 financial crisis. The companies were taken over as the housing market cratered and received a $187.5 billion taxpayer rescue. They since have become profitable again, paying a combined $292.3 billion in dividends to the U.S. Treasury.

Trump has directed Treasury Secretary Steven Mnunchin to develop a plan to ensure that Fannie Mae and Freddie Mac can operate as private companies while preserving access to 30-year fixed-rate mortgages and minimizing risks to the broader economy.

The order also directs Housing and Urban Development (HUD) Secretary Ben Carson to reduce risks to taxpayers from the housing finance support offered by the Federal Housing Agency.

The manufactured home industry will monitor the details of Trump order that could affect manufactured housing and the changes at HUD that would alter existing FHA/USDA manufactured home financing programs.


Will Privatizing Fannie-Freddie slow or accelerate “Duty To Serve” Plan For Manufactured Home Chattel Loans

“Duty to serve” manufactured homes was mandated, not optional, by the U.S. Congress of the Housing and Economic Recovery Act (HERA) of 2008. The most important requirement of the legislation was that Fannie Mae and/or Freddie Mac develop a plan to serve the manufactured housing financing market including endorsing the purchase of chattel loans for manufactured homes.

For almost a decade the GSEs “stonewalled” manufactured housing industry pressure to comply with the “duty to serve.” Fannie Mae and Freddie Mac reluctantly devised a three-year plan in December 2017, loaded with intentions continuing to study and analyze, justify and research chattel loans for the following three years. In other words, continued to “kick the can down the road”. However, Fannie Mae and Freddie Mac did acknowledge in that plan their research has shown that today’s manufactured home should be considered worthy of equal financing commensurate with traditional site-built homes.

This begs the question, “will the order privatizing Fannie Mae and Freddie Mac slow, or perhaps accelerate the “duty to serve” manufactured home financing mandate.

Though Treasury Secretary Mnuchin has said it’s a priority to return the companies to the private market, such a dramatic shift probably won’t happen any time soon. The White House has made it clear it wants to work with Congress, where a series of housing finance reform efforts have faltered over the past decade amid political divisions.

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