GSE reform made headlines again last week when Treasury secretary nominee Steve Mnuchin alluded to his plans for GSE reform in an interview. However the plans are likely to stay just that — plans. There are lots of other areas of interest that Trump needs to focus on instead.
Mortgage Bankers Association President and CEO David Stevens said in an interview with HousingWire that he doesn’t see GSE reform becoming a reality. “It’s hard to see how it makes any shortlist.”
During a Fox Business interview last week with Maria Bartiromo, Mnuchin said the government-sponsored enterprises will be taken out of “government ownership,” restructured and privatized.
During the interview, Trump’s choice to lead the Department of Commerce Wilbur Ross, who was also being interviewed, said that government is “not the right way to allocate capital,” and said that Fannie Mae and Freddie Mac are not “exactly role models” due to the two institutions being at the forefront of government influence after the financial crisis.
But the reality is, once Donald Trump consults the Office of Management and Budget, he will realize that Fannie and Freddie are spinning off $10 to $12 billion to the budgets, Stevens said. And Trump is going to need that money.
As far as the Fox interview, Stevens said that Mnuchin’s comments on the GSEs were only a small portion of his entire interview. Mnuchin is coming into this role as a business guy and will see that GSE reform is a complex issue, Stevens said.
GSE reform, while often discussed, isn’t a priority. Instead, Stevens said Trump is going to focus his attention on more important issues like comprehensive tax reform, which includes the mortgage interest deduction, an area of much greater importance to Americans and the MBA.
Mnuchin has also stirred the pot when it comes to the MID, causing people to think changes could be coming to that as well, a move that the MBA would closely watch.
Stevens explained that eliminating the MID would hurt the middle class and that any attempt to interfere with tax policy on real estate would be met aggressively by housing trade groups, including the MBA. “We would be vehemently opposed to getting rid of it,” he said of any attempt to change the MID independently.
