Zillow and the Bipartisan Policy Center hosted a housing forum in Washington, DC on Oct. 24, which focused on the housing recovery, and proposed changes to the nation’s mortgage finance system.

Several of the country’s top housing experts and influential policymakers gathered to discuss (and help consumers understand) how proposed changes to the mortgage finance system may affect them.

Getting Our House in Order: Solving the Lingering Issues of the Housing Recession” drew hundreds of people, and gave consumers the opportunity to ask their questions directly (in person and by social media) of the lawmakers and experts who presented.

Watch the full-day program here, read tweets under hashtag #housingfuture, or read highlights below.

Almost every speaker and panelist at the event stressed that the longer we wait to tackle the reform of Fannie Mae and Freddie Mac, referred to as the government-sponsored enterprises (GSEs), the harder it will be to solve. The government takeover of Fannie Mae and Freddie Mac was never intended to be permanent, and nobody seems comfortable with the current arrangement, in which roughly 90 percent of mortgages are backed in some form or another by the federal government.

FHA Commissioner Carol Galante, in a midday keynote address, pleaded with Congress to fully recognize the urgency of GSE reform.

“We all know that housing finance reform is necessary to ensure that our economy emerges stronger and more secure from the worst recession since the Great Depression,” Galante said. “This has got to be one of our top priorities in this country.”


Keynote address by Carol Galante, Federal Housing Administration Commissioner and HUD Assistant Secretary for Housing

Senator Mark Warner, D-Va., author of a bipartisan Senate plan for GSE reform, was even more blunt, saying, “The status quo isn’t going to work.” He also urged an end to political squabbles that sometimes get in the way of good ideas, and noted the support the idea already has from both sides.

“Perfect is too often the enemy of good in this town,” Corker said. “We have 10 senators on [the Corker-Warner bill], five from each side. I challenge anyone to find that kind of broad support for any other issue in this Senate.”

But despite a near-universal desire to get something done, there was an almost equally universal acknowledgement that nothing will likely get done until at least the next year, if not later. Two factors are responsible for holding up the process – practicality and politics.

“There’s no dry run on this,” said Jason Gold, director and senior fellow of the Progressive Policy Institute, stressing the importance of getting every detail of complex reform right. “If you just flip the switch on something unknown overnight, you’ll make 2008 look like peanuts.”

The political process is also lengthy, and can’t really be rushed.

“I’m a very practical person,” said Richard Smith, chairman, CEO and president of Realogy. “I think (GSE reform this year) has no chance.”


A Full Appraisal: An Independent View of GSE Reform Prospects, Pitfalls and Possibilities moderated by Nick Timiraos of The Wall Street Journal (far right).

Four speakers represented plans for GSE reform during the program. Two of the plans — the plan from the Bipartisan Policy Center (BPC) and the Corker-Warner plan — are broadly similar, with each calling for Fannie and Freddie to be replaced by a single government entity responsible for guaranteeing conforming mortgages, with an explicit guarantee. But even the two most similar plans diverge – Corker-Warner explicitly calls for private capital to retain a 10 percent capital reserve as a backstop against potential losses. The BPC plan says the exact amount of reserves should be determined by regulators and can remain flexible.

A plan from Jim Millstein, architect of the restructuring of insurance giant AIG for the U.S. Treasury, advocated salvaging and re-capitalizing the good parts of Fannie and Freddie and selling them into the private market.

“The answer [to GSE reform] is staring us in the face, but in this town it’s a sacrilege to say,” said Millstein, chairman and CEO of Millstein & Co., L.P. “It’s Fannie and Freddie.”

And Rep. Randy Neugebauer, R-Texas, presented PATH legislation from the House of Representatives that would essentially remove the government guarantee as we know it entirely, leaving private capital to bear all the risks – and reap all the rewards – in a fully privatized system. He acknowledged that under a plan similar to PATH, some homeowners may not qualify for a mortgage, but noted that homeownership isn’t for everybody.

“There’s this idea in this country that homeownership is an entitlement,” Neugebauer said. “But America is a land of opportunity, and homeownership is an opportunity, not an entitlement.”


Representative Randy Neugebauer (right) and Jim Millstein (left) discuss their proposed plans in a panel moderated by Neil Irwin of the Washington Post.

And these four plans are not the only proposals that exist. Several dozen ideas have been floated, some more formal than others, from sources both public and private.

Closing out the day was Acting FHFA Director Edward J. DeMarco, who captivated the audience by announcing that changes to the limits in amounts of mortgages backed by Fannie Mae and Freddie Mac – known as conforming loans – would not change until at least next spring. Instead, government guarantee fees charged by Fannie Mae and Freddie Mac would continue to be gradually raised, making them more expensive and making private, non-government options more competitive.

DeMarco also cautioned against complacency toward GSE reform now that Fannie and Freddie are profitable again.

“As Fannie Mae and Freddie Mac have begun to report positive net income there may be a growing perception that the problems that led to [their] conservatorship have been fixed,” DeMarco said. “That is not the case.”


Keynote address by Edward J. DeMarco, acting director of the Federal Housing Finance Agency

About the Author

Cory Hopkins manages data public relations for Zillow. To learn more about Cory, click here.

  • catherineforrights

    That gives the government the right to take our property..!! I now understand why Wells Fargo sold my loan to Fannie May… Don’t we have a say in this?? Why els would they do it.. Give up the interest.. somethings up.. is renting the answer now..??? I am selling mine ASAP

  • Joe Mamma

    I’m going to pay my home off ASAP so I no longer have to deal with the bureaucracy of our government… And may God help our children with their American dreams. Poor paying jobs and not a rainbow in sight for their pot-of-gold.

  • Peghead

    Social Security is broke. Gov health care is a flop. The war on drugs was lost. Now the Gov wants control of our mortgages? Might as well pack up and move to the UK or France where the whole country is on welfare. At least they get 2-3 months vacation every year and those who have a job work 6 hrs a day and it takes a government decree to lose your job.

  • ZackeryWilliamsPoptart

    What a bunch of Scumbags, To Say “There’s this idea in this country that homeownership is an entitlement,” Neugebauer said. “But America is a land of opportunity, and homeownership is an opportunity, not an entitlement.”

    Rep. Randy Neugebauer, R-Texas LOSER!! What we are entitled to is Fair Lending, Not Tricks, Fraud, and Now worse Racketeering, by a Bank Called Bank Of America. You Sir are A Traitor of Our Country!

  • ZackeryWilliamsPoptart

    Rep. Randy Neugebauer, R-Texas Traitor of Our Country!

    We Sir are entitled to Fair, Honest Lending, Not Fraud, Racketeering You disgusting Slob!.

  • Ana Banan

    @ Peghead – Social security is not broke. In fact, it is solvent ONLY because it has not been privatized…[like all the trusts were managed by private fund managers (i.e. Wall Street) who bled the funds dry and who our government (WE the people) paid billions in stipends, stimulus and grants to keep these criminals afloat] –whereas the STILL SOLVENT trusts (i.e. Social Security) which have been MANDATORILY FUNDED BY THOSE WHO *WORK* and should be the ONLY people who are therefore ENTITLED TO COLLECT from that fund is ONLY solvent BECAUSE it has NOT been relinquished to the greedy, corrupt, morally bankrupt ‘fund managers’ who have turned this country inside out and whose deeds this country will NOT recover for decades to come because the industry is STILL deregulated as the day it imploded years ago! Social Security trust and the veterans pension trust are being heavily lobbied by private groups who are seeking control because those are the two remaining funds that are NOT insolvent!

  • Ana Banan

    if you don’t have home ownership, you don’t have stable communities, you don’t have steady tax revenue for schools, hospitals, and other social and community stabilizing systems. You deplete and disintegrate any potential growth and stability that would entice businesses which would provide jobs. Why are these nut jobs making decisions that are obviously razor-focused on crushing the people of this nation and everything that makes this nation strong and stable while lining their own pockets and those of their campaign contributors??? Why do we stand for this???

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