Trump’s Call to Reform the Housing Finance Market Finally Addressed by Department of Housing and Urban Development and the Treasury Department


Earlier today, on Thursday, Sept. 5, 2019, the United States Department of Housing and Urban Development, in conjunction with the Treasury Department, publicly announced plans to work together to reform the nation’s current system for financing the purchase of houses throughout the United States.

These initial plans were drawn up and talked about because U.S. President Donald Trump filed a presidential memo earlier this year, in March 2019, in which Steven Mnuchin, the Secretary of the Department of the Treasury, was directed to come up with a basic groundwork for the reformation of the domestic housing financing system.

The plan from the Treasury Department is made up of a total of 49 unique, independent recommendations. Most of these items are related to getting rid of Freddie Mac and Fannie Mae. Although the Treasury Department wants to kick these two conservators out of the equation, the federal government agency still guarantees that the American people will be provided with housing initiatives to make buying them affordable for lower-income households, as well as multi-family and single-family lending alike.

Fannie Mae and Freddie Mac both have been overseen by the United States federal government since the dawn of the Great Recession through what’s known as a conservatorship. Although the Treasury Department didn’t say that it plans to try to kill the two lending organizations, it did, in fact, share that it wants to end the long-ongoing conservatorship as soon as possible.

The plan hailing from the Department of Housing and Urban Development differs from the one from the Treasury Department in that it primarily wants to provide a new mission for the Federal Housing Administration, as well as make sure that there are sufficiently strong tools for the government to hedge against risk safely.

Both of these plans ask Congress to take matters into its own hands, coming up with new laws and bills that would almost certainly have to be passed in one-by-one fashion, rather than coming out with a massive novel of proposed legislation that would effectively reform the domestic housing financing market.

The Treasury Department wanted Congress to engage in this comprehensive manner, though the Department of Housing and Urban Development opted for proposed legislation to be passed in one-by-one fashion.

One problem with these plans is that they weren’t very specific. This means that there’s still a lot of work to do, as well as the likelihood that this reform won’t end up being as complete or as good as these government agencies think it will be.


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