WASHINGTON — The top Democrats on the House and Senate banking committees urged the Trump administration to halt any plans to reform the U.S. housing finance system in the midst of the coronavirus pandemic.
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, told Treasury Secretary Steven Mnuchin in a letter Wednesday to pull the plug on any steps to overhaul Fannie Mae and Freddie Mac with the pandemic still taking a toll on the economy.
“Amidst this uncertainty, any significant changes to our multi-trillion dollar housing system, which affects every person in this country, could further damage the economy,” wrote Waters and Brown. “Market participants have similarly raised concerns that sudden changes to the housing system could further compromise the financial stability of millions of families and the housing market both during and after the pandemic.”
The letter said Mnuchin "was not forthcoming" in congressional testimony about possible changes to housing finance policy but added that "in recent media reports you have indicated you do in fact have plans you are working to set in motion."
"We are concerned that some of the policy changes Treasury has previously endorsed, including restricting or eliminating guarantees for certain types of loans and other, more aggressive proposals, could threaten the stability of the $11 trillion mortgage market," Waters and Brown wrote.
The letter comes as the Federal Housing Finance Agency has developed procedures intended to release the government-sponsored enterprises from conservatorship. The agency recently released a new risk-based capital plan for Fannie and Freddie. Meanwhile, both the FHFA and Treasury oversee agreements that require the two companies to sweep profits into the federal government.
In their letter to Mnuchin, the two lawmakers added that millions of borrowers are currently in forbearance on their mortgages because of the pandemic and that housing experts are predicting a possible “avalanche” of evictions on the horizon.
Waters and Brown are requesting a briefing from Mnuchin on any actions that the Treasury Department might take in the next month that will affect the housing system.
