I was fortunate enough to attend a recent gathering in Washington, which brought over 400 people together with the common goal of finding a new way to ensure that the federal government can continue to back 30-year fixed rate conventional home loans.  The National Association of Realtors® (NAR) Housing Finance Reform Policy Forum gave REALTORS® the opportunity to work alongside lawmakers and federal administrators as they strategize how to keep mortgages affordable and reliable for consumers. Fannie Mae and Freddie Mac have changed greatly since the housing financial crisis in 2005, and the secondary mortgage market needs to change accordingly. To quote directly from the NAR website, the vision includes:

• Leveraging reforms and innovations implemented since the crisis while completing the process with instrumental updates for a fully functioning liquid market.
• Promoting competition in the secondary market through proven structures to correct market failures.
• Preserving the 30-year fixed rate mortgage and focusing the mission on liquid secondary markets for Middle America and underserved borrowers.
• Minimizing the cost to consumers in normal and stress periods while maximizing access for creditworthy borrowers.
• Protecting taxpayers by using private capital.
• Maintaining simplicity in the transition while avoiding market disruptions.

The ability to easily finance a home purchase is paramount to the overall health of the real estate market. Risky mortgage lending practices have historically been the crux of real estate crises. Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) were placed in a conservatorship in 2008 and still remain that way today. The GSEs currently seem to succeeding with well enforced credit standards yet do not have sufficient capital. Turning them into a publicly regulated private utility is a potential solution which could bring all of the pieces together, ideally with a seamless transition. The full, detailed report explaining this option can be found at here.