The notion that the incoming Trump administration should recapitalize government-sponsored enterprises Fannie Mae and Freddie Mac as a predicate to reforming them, risks the political overcorrection that proponents of this idea claim to want to avoid, while ignoring the critically needed reforms necessary to ensure a stable housing finance system through all economic cycles.

First, proponents of "recap and release" misread the political risks and the depth of interest that key representatives and senators have in determining the long-term future of the GSEs. In early 2016, the largest housing groups (National Association of Realtors, National Association of Home Builders, American Bankers Association, Mortgage Bankers Association and National Housing Conference) united in a joint letter to voice our collective view that policymakers "need to continue to focus on the paramount objective of fixing the structural flaws that led to the breakdown of the housing finance system — the only outcome that will protect taxpayers, reserve access to credit, and ensure a stable housing finance system."

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.