By Pete Schroeder and Richard Leong
NEW YORK/WASHINGTON (Reuters) – The Trump administration’s hotly anticipated blueprint for overhauling mortgage guarantors Fannie Mae and Freddie Mac may not be published until September as the U.S. Treasury juggles several other pressing issues, the housing regulator told Reuters.
Mark Calabria, director of the Federal Housing Finance Agency (FHFA), which oversees the government-sponsored enterprises, said in an interview it was his “hope” that they would have exited or be ready to exit conservatorship before his term ends in 2024.
However, Calabria is not operating toward a hard deadline, he noted.
“That’s my time horizon,” he said, referring to the end of his term. “I’m under no expectation to try to get all this done. … So if in four years, nine months they’re not out of conservatorship, I’m not pushing them out.”
Calabria’s comments will temper market expectations for a speedy overhaul of Fannie and Freddie before the 2020 presidential election.
Fannie and Freddie, which guarantee over half of all U.S. mortgages, have operated under government conservatorship since their bailout during the 2008 subprime mortgage crisis. Washington has struggled for years to devise a plan to safely return them to the private sector.
The Trump administration has said it is eager to push ahead with housing finance reform and industry analysts and insiders had expected a Treasury-led proposal for removing them from conservatorship to be published by this month. Calabria said the report was “essentially done,” that he had seen a draft, and expected it to be published in August or September.
Treasury Secretary Steven Mnuchin, who has led the push for reforming Fannie and Freddie within the administration, is “juggling a number of balls,” Calabria said. Mnuchin is involved in the ongoing trade war with China, debt ceiling negotiations with Congress and imposing sanctions on Iran. Craig Phillips, Mnuchin’s adviser who had been closely involved in the reform plan, also left in June.
Despite his heavy workload Mnuchin continues to work with his team on housing finance issues on a weekly basis, a person familiar with the matter told Reuters.
Calabria said he expected the Treasury will in the report back some form of government guarantee for Fannie and Freddie. But he said he planned to advocate for a guarantee limited to the mortgage-backed securities issued by the pair, rather than a government backstop for the companies themselves.
While Calabria sketched a potential five-year time horizon for removing Fannie and Freddie from conservatorship, he added that the government did not have forever to overhaul them and needs to progress while the housing market remains stable.
“The market looks pretty strong now, so that to me is the time when we want to make real repairs, he said.