MARCO DE REFERENCIA
PLANIFICACIÓN DEL MONITOREO
The Obama Administration has also weighed in on the housing front . Shortly before this Housing Report Card for 2013 went to press, President Barack Obama delivered a major address in Phoenix laying out his vision for U .S . housing policy . Although pressed by his Democratic base since early in his first term, the President had spent little time or rhetoric on specific housing issues in his first five years in office, with the exception of the problem of rising foreclosures as a result of the economic meltdown that began in 2007 . His domestic focus has been on rescuing a failing econ- omy and trying to stimulate job creation . Both efforts, of course, had a significant and positive impact on the housing market .
The essential elements of the President’s plan are:22 ■
■ Support for legislative action to allow and encour-
age more U .S . families to refinance their homes at low interest rates, thus cutting their monthly payments and strengthening family budgets .
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■ A promise to issue an executive order to expand the
pool of borrowers eligible for loans from federally- backed programs so that many borrowers without the highest-quality credit can now receive loans .
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■ Continued support for 30-year mortgages, a feature
of American housing policy that had been instru- mental in allowing large numbers of American fami- lies to own homes .
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■ A call for “an end to the federally owned mortgage
giants Fannie Mae and Freddie Mac … placing the vast majority of financial risk on private-sector lenders .”
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■ A fee on mortgage-backed security transactions to
provide a funding source for affordable housing for low- and moderate-income households .
The White House has published a graphic (see page 67) to illustrate some of the main points of the Presi- dent’s plan .23
Of particular interest to the housing situation in Massa- chusetts, the President stated, “We’ve got to make sure that we are creating affordable opportunities when it comes to rental properties . In the run-up to the crisis, banks and governments too often made everybody feel like they had to own a home even if they weren’t ready and didn’t have the payments . That’s a mistake we should not repeat .” And the next day, in an interview with Zillow, the President further “suggested [that] having affordable rental options available while people were saving up for a down payment was essential .”24
He also called on communities to reduce barriers to the construction of low- and moderate-income multifamily rental housing .
Reaction to the President’s announcement has been generally positive, especially from groups represent- ing the producers and developers of housing . Reaction from low-income housing advocates was somewhat less enthusiastic, as they focused on the lack of specific funding requests for extremely low-income housing and for the homeless .25
While few in the affordable housing world would contest the need for reform of Fannie Mae and Fred- die Mac, both GSEs (Government Sponsored Entities) have become profitable and have paid back billions of dollars to the Federal Government following their bailouts during the financial crisis . As reported by the Associated Press, Fannie Mae earned $10 .1 billion in the second quarter of 2013 alone and will repay $10 .2 billion to the US Treasury . The AP reported on August 9, 2013, that “The housing recovery that began last year has made Fannie and Freddie profitable again . Together they will have paid back about $146 billion of their government loans [$116 billion of which went to Fannie Mae] by next month . Those payments are help- ing make this year’s federal budget deficit the smallest since President Obama took office in 2009 .”26 Fannie
Mae’s sibling, Freddie Mac, which earned $5 billion in the second quarter of 2013, will repay $4 .4 billion to the US Treasury and is requesting no additional subsi- dies .27
Perhaps more important for the long run is finding a way to fill the role that Fannie and Freddie have played in the provision of affordable rental housing over the last several decades . Especially since 1992 and the establishment of aggressive goals for the GSEs related to affordable housing, Fannie particularly has supported the development and rehabilitation of affordable housing through the purchase of Low- Income Housing Tax Credits and its participation in the financing of affordable housing mortgage loans, often in partnership with state housing finance agen- cies . Because of the scale of Fannie Mae investments, and the expertise the entity has developed over time, it will be difficult to substitute for Fannie’s role and impact .
Clearly, given the experience during the financial crisis, both Fannie and Freddie need to undergo at least significant reform and improved oversight . But Fannie and Freddie have also helped to make our system of stable and predictable 30-year mortgages (when the system works as intended) the envy of the world in its ability to extend homeownership opportunities broadly to the middle class and, as discussed above, to support the financing of affordable multifamily rental housing . If Fannie and Freddie are in fact eliminated, their replacement(s) must be designed to maintain that stability and support .