Sixteen years after Fannie Mae and Freddie Mac were placed under government conservatorship, the commercial real estate world is still left wondering: when will this era finally end? The question has taken on new urgency in light of former President Donald Trump’s repeated calls to wind down the conservatorships—statements that have reignited debate over the implicit government guarantees that have long supported these mortgage giants.
Now, the National Housing Conference has stepped into the fray, releasing a white paper that lays out key policy objectives for housing finance reform. According to the NHC, preserving—and ideally enhancing—five critical aspects of a healthy housing market is “essential” for both single-family and multifamily sectors. At the heart of their recommendations is a call to revisit the regulatory overhaul for government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, as envisioned by the Housing and Economic Recovery Act of 2008. The NHC contends that the promise of HERA has been “underappreciated,” largely due to the prolonged conservatorships. They argue that the Federal Housing Administration needs a “reorientation and identification of necessary regulatory powers” to facilitate the GSEs’ eventual return to private status.
A robust secondary mortgage market is another pillar of the NHC’s vision. The organization stresses the importance of mortgage funding liquidity, particularly through the TBA market, which accounts for more than 90% of mortgage-backed securities trading. Fannie Mae and Freddie Mac currently support nearly half of all single-family mortgages and a substantial share of multifamily financing. Liquidity, the NHC notes, is especially vital for multifamily property owners who must periodically refinance.
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Broad, safe, and reliable access to affordable mortgage credit is also a statutory requirement under HERA, and the NHC insists this must remain a priority. Such access is crucial for first-time buyers, minorities, and low- to moderate-income households. While some experts have proposed narrowing the GSEs’ scope and relying more on private market solutions or targeted government programs, the NHC cautions that any reduction in the Enterprises’ footprint should only occur if there is “high confidence that alternative channels can serve affected borrowers fairly and effectively.”
The NHC also addresses the thorny issue of the implicit government guarantee that existed before the conservatorships—a structure that was replaced by full government control. Reconciling the end of conservatorship, a return to private company status, and the current level of government oversight would be nearly impossible, the NHC warns. A central risk is how the market would value the implicit guarantee without explicit government backing. The organization believes that a statutory full faith and credit guarantee is “politically unfeasible for the foreseeable future.” Instead, they suggest a preferred stock purchase agreement that preserves the Federal Housing Finance Agency’s regulatory authority—allowing it to prevent reckless pricing wars, ensure equal treatment of lenders, prohibit irresponsible portfolio practices, and manage the Common Securitization Platform, all while building capital. Still, the NHC acknowledges that the ultimate outcome is impossible to predict.
Ensuring strong and independent regulation is another critical component. The FHFA, according to the NHC, should continue to examine the GSEs, set standards, and require corrective actions, but not manage their daily operations. The agency, along with the Treasury Department, would need new objectives to regulate market conduct and protect against unfair competition.
Finally, the NHC emphasizes the need for a smooth and transparent transition out of conservatorship—one that avoids market shocks, provides clarity for investors, and safeguards existing affordable housing programs.
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