Enterprise and Housing Finance System Imperatives
Why Fannie Mae and Freddie Mac must maintain and expand nationwide access to affordable, sustainable mortgages and rental housing
Housing is already out of reach for too many families. Any changes to the housing system cannot raise housing costs on homeowners and renters. Fannie Mae and Freddie Mac (the Enterprises) must maintain and expand nationwide access to affordable, sustainable mortgages and rental housing.
By supporting broad, nationwide mortgage access for all creditworthy borrowers and maintaining mortgage access in all American communities, including our nation's underserved markets, the Enterprises will continue to support a deep, highly liquid MBS market, keeping mortgage costs low. Affordable financing for multifamily properties will help preserve and expand the rental housing market, helping to address our housing supply shortage and bringing down costs for families.
First and foremost, we should not make any changes to our housing finance system that will raise housing costs for homeowners or renters.
The U.S. is the only place with a widely available, 30-year fixed-rate prepayable mortgage. These loans are the envy of the world and have made it possible for millions of families to own their own homes and build wealth. The housing finance system must preserve access to affordable, sustainable housing for homeowners and renters by continuing to provide long-term loans at low rates and helping to bring down rapidly rising monthly costs like utilities and insurance. Today, low housing supply, high prices, and elevated financing costs have pushed costs to unaffordable levels for many homeowners and renters. At this moment, we cannot take any actions that will raise costs and put more pressure on American families.
Going forward, the housing finance system must maintain and scale the Enterprises’ affordable housing objectives to support access for all homeowners and renters.
It is essential to the health of America’s housing finance system that the Enterprises:
Support broad, nationwide access to 30-year, fixed rate mortgages and long-term multifamily housing loans;
Maintain affordable housing goals that are transparent, measurable, and support meaningful access to sustainable and affordable housing for very low- and low-income households;
Expand service for rural housing, manufactured housing, and affordable housing preservation – markets that are often underserved by the mortgage system – through enforcement of Duty to Serve requirements;
Ensure the Enterprises fulfill and build on their statutory obligation to fund the Housing Trust Fund and Capital Magnet Fund annually to boost the nation’s housing supply; and
Support the construction and preservation of homes families can afford.
While new revenue would not replace the essential functions of the Enterprises as described above, the federal government must use any new federal revenue to boost housing supply to bring housing costs down further.
It is UMMC’s position that the Enterprises must, above all, prioritize improving housing affordability, expanding their reach to underserved borrowers and communities, and preserving affordability and access in the mortgage market.
Any changes to the Enterprises cannot raise costs on renters and homeowners, especially as we continue to face a housing supply crisis. The U.S. has a significant housing supply gap, with estimates of the housing shortage ranging from 1.5 million to 5.5 million homes. This has left both homeowners and renters paying larger shares of their income for housing or being locked out of the housing market altogether.
If the government generates new revenue through changes in the housing finance system in the future, that funding should be reserved for efforts to increase the affordable housing supply for both renters and homeowners and bring down the largest cost in families’ monthly budgets. Treasury should use any new federal revenue to establish a flexible, locally-tailored affordable housing supply fund to support construction and rehabilitation of affordable homes for homeowners and renters. With millions of Americans priced out of the housing market, any new revenue generated by the housing system should go back into bringing down housing costs. New funding is a supplement to – not a substitute for – providing the market liquidity and affordable financing Americans depend on.
About The Underserved Mortgage Markets Coalition
The Underserved Mortgage Markets Coalition (UMMC) is a coalition of more than 40 organizations committed to expanding access to affordable and sustainable homeownership and housing opportunities through Fannie Mae and Freddie Mac.