The Government Accountability Office (GAO) issued a new report Housing Finance: Prolonged Conservatorships of Fannie Mae and Freddie Mac Prompt Need for Reform. The report, prepared for Chairwoman of the House Committee on Financial Services Maxine Waters (D-CA) and Congressman Sean Duffy (R-WI), calls on Congress to “consider legislation for the future federal role in housing finance that addresses the structure of the enterprises, establishes clear, specific, and prioritized goals and considers all relevant federal entities, such as FHA and Ginnie Mae.”
The GAO reviewed 14 housing finance reform proposals from Congress, agencies, industry groups and think tanks. They found that most assessed potential changes to the housing finance system, such as addressing fiscal exposure, protecting investors and considering the implications of the transition to a new system. However, many proposals lack clearly defined and prioritized goals or do not address the role of other federal entities in the housing finance system, such as Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae).
Since 2013, GAO has designated the federal role in housing finance as a high-risk area because of the explicit fiscal exposure for the federal government. As of October 2018, the dollar amounts of Fannie Mae and Freddie Mac’s (enterprises) outstanding mortgage-backed securities (MBS) have grown by more than $800 billion since the end of 2008. Together, the enterprises and Ginnie Mae have issued or guaranteed 95 percent or more of all MBS issued annually since 2008.