HUD Secretary Julian Castro said Monday that overhauling the mortgage finance system remains a top priority for the final two years of the Obama administration.
Castro suggested that the next Congress consider legislation that would wind down and eventually eliminate mortgage giants Fannie Mae and Freddie Mac as part of the effort to boost the housing market’s recovery.
{mosads}”This could be, I believe, a good victory either in the lame-duck session or, more realistically, perhaps in the next term of Congress where there is bipartisan support for housing finance reform, for doing away with Fannie and Freddie as we’ve known them, creating a backstop,” he told Bloomberg Television.
The Senate has generated two bipartisan bills, including one by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) that gained approval by the panel in May.
But, since then, there has been little movement to get a bill through Congress.
“Introducing more private capital into the market and taking the taxpayers off the hook if we do ever experience what we just went through as part of the housing crisis in 2007, 2008, 2009, that is a priority this administration and for HUD,” Castro said.
During the interview, Castro also expressed concerns about potential home buyers struggling to qualify for mortgages.
“If a few years ago, it was too easy to get a home loan and today what we see out there is that for many everyday Americans who are responsible and hardworking it’s too difficult to get a home loan,” he said.
“Then the question is where is the pendulum best placed? Can we get the pendulum right in the middle where it belongs with a balance of ensuring that we don’t slide back to where we were and also ensuring there is good access to credit for Americans who are ready and responsible to buy a home.”
He also discussed Monday’s report showing that the Federal Housing Administration’s financial picture had improved in the past year, and the agency is finally out of debt for the first time in two years.
“The underlying fundamentals of the portfolio of the fund are stronger than they have been in quite a while,” Castro said.
Still, the agency has more progress to make.
Castro said that the FHA’s insurance fund should reach the congressionally mandated 2 percent capital requirement in 2016.
When asked about whether more changes are in the offing to improve its balance sheet, Castro said it would be premature to announce when the FHA might be able to lower fees and premiums, which are at a record high.
“That analysis has not yet been done,” he said.
“We just got this annual report, and so we’ll be taking the time to do the due diligence that is part of answering that question.”
He said that while trying to ensure that the agency’s finances remain in good shape, the FHA needs to fulfill its role to ensure that first-time home buyers and middle-income buyers have sufficient access to credit.
“It’s all about striking that balance, and those are the questions that, going forward, we’re going to be putting a lot of time and effort to continually analyzing,” he said.