GSE reform is happening: Are people paying attention?
Congress recently adopted so-called government-sponsored enterprise “Jump Start” legislation. Since the bill actually restricts actions to facilitate GSE reform, this is somewhat of a misnomer. But the goal is understandable. Congress wants to reserve to itself the right to make the big picture GSE reform decisions, like whether there should be a federal guarantee and whether and in what form Fannie Mae and Freddie Mac should survive. But no one should be misled by the lack of comprehensive Congressional action into thinking that GSE reform is on hold. Fundamental reforms already have or are now taking place – reforms that reduce risk, protect taxpayers and build on lessons we learned from the 2008 crisis. The most fundamental reform is loan quality. The GSEs would not have gone into conservatorship if they simply hadn’t made no doc (Alt A) loans and purchased MBS securities. With QM and strong underwriting standards, Alt A is a thing of the past. And GSEs have not only stopped making portfolio purchases, they are unwinding their existing portfolio holdings.
The disagreement on what comes next
U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro awarded $1.6 billion in grants to provide funding to 6,400 local homeless housing and service programs across the U.S., Puerto Rico, Guam and the U.S. Virgin Islands. The Tier 1 Continuum of Care (CoC) grants announced today support the Obama Administration’s efforts to end homelessness by providing critically needed housing and support services to individuals and families experiencing homelessness. HUD will award approximately $300 million in “Tier 2 grants” in the spring to support hundreds more local programs.