FHFA head addresses real estate market difficulties; legislators pan fair real estate strategies

Testifying prior to the House Financial Services Committee today, Federal Housing Finance Agency Director Sandra Thompson acknowledged the difficulties presently dealing with the home mortgage market as an outcome of inflation and increasing rate of interest. Among other things, she kept in mind that house purchase applications dropped 24% year over year in June, while pending house sales were down 13.5%. She included, nevertheless, that regardless of the difficulties, home mortgage customers today are much better located than they were prior to the monetary crisis in the early 2000s.

With regard to Fannie Mae and Freddie Mac, Thompson kept in mind that current modifications to the Senior Preferred Stock Purchase Agreements in between FHFA and the Treasury Department, together with “robust comprehensive income” have “significantly boosted net worth for both enterprises, although there is a long way to go to meet regulatory capital requirements.”

In associated news, a group of Senate Republicans composed to FHFA prompting the company to reassess the “equitable housing finance plans” just recently established by Fannie Mae and Freddie Mac, which are multiyear strategies detailing how they will recognize homeownership barriers dealt with by Black and Latino customers and how they will resolve racial and ethnic spaces in homeownership.

The legislators kept in mind that the strategies raise legal issues, needlessly politicize the GSEs and press the limitations of the GSEs’ charters, to name a few things. They likewise warned that the strategies “risk setting up another generation of minority borrowers for failure” by unwinding underwriting requirements. “After the last few years of very significant house price appreciation, plans that push minority and low-income families into high-leveraged home purchases are concerning and seem to blatantly ignore the lessons of the last housing crisis,” they composed. “As housing markets are cyclical, it is a question of when, not if, the next downturn begins.”