SEATTLE NEWS ARCHIVES & FEATURES
Government’s role in lending debated at Realtor forum
May 11, 2011, 9:43 AM | Updated: Mar 4, 2016, 6:00 am
Reforms to America’s housing finance market must ensure a reliable source of affordable mortgage lending for creditworthy consumers.
That’s according to industry insiders who examined the federal government’s future role in the secondary mortgage market at the Fannie Mae & Freddie Mac: Obama Options and Beyond session during the National Association of Realtors 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C.
“The government’s large presence in the housing finance is unhealthy and needs to be scaled back,” said James Parrot, senior advisor for housing at the National Economic Council.
“However, the steps we take over next few years to reduce the government’s role and increase private capital will have a tremendous impact on the housing market and economy as well as the availability and affordability of mortgages. The objective isn’t to turn away from housing, but to make the housing finance market stronger so that families and their most important asset are better protected.”
Susan Wachter, a professor at The Wharton School at the University of Pennsylvania, agreed that private capital needs to return to the housing finance market, but that most likely won’t happen until the market has stabilized.
“There needs to be more accountability and transparency in the secondary mortgage market so that private investors can best assess their risk and safely get back into the market,” Wachter said.
Mark Calabria, director of Financial Regulation Studies at the Cato Institute, argued for a very limited government role in the secondary mortgage market, saying that the private capital market has the funds and capacity to absorb Fannie Mae and Freddie Mac’s market share.
David Katkov, executive vice president and chief business officer at The PMI Group, countered that it would be naïve to move to a purely private market because it’s been successful in other countries, adding that the U.S.’s housing finance system dwarfs that of other countries and is far more complex.
