WASHINGTON (12/9/14)--Comprehensive housing finance reform is the last unfinished piece of broader housing reform, according to Michael Stegman, counselor to the secretary of the Treasury for housing finance policy.
Speaking at a Women in Housing and Finance event last week, Stegman said only congressional action could put the necessary reforms in place.
"Until Congress passes legislation President Obama can sign into law, many mortgage credit decisions that should be made by private firms in a well-regulated, competitive marketplace will continue to be made by government agencies," he said.
The continuing conservatorship of Fannie Mae and Freddie Mac was one example he cited, saying "an enduring conservatorship is unsustainable and undesirable for everyone," because both potential homebuyers and taxpayers are left vulnerable by current circumstances.
"The critical flaws in the legacy system that allowed private shareholders to reap unlimited profits while leaving taxpayers shouldering enormous losses cannot be fixed by a regulator or conservator. They require congressional action," he said. "This last point cannot be overstated, so let me repeat: The only way to responsibly end the conservatorship is through legislation that puts in place a sustainable housing finance system that protects taxpayers and brings stability and certainty back to the mortgage market."
Stegman credited bipartisan legislation that emerged from the Senate Banking Committee in May as an example of the across-the-aisle cooperation needed in the 114th Congress.
The Credit Union National Association supported that legislation, and in recent months has met with White House economic policy staff and wrote members of Congress to ensure credit unions continue to have access to the housing finance market.
Items that Stegman said have "broad consensus" from legislators when it comes to housing finance reform include: