The Underappreciated Role of Freddie Mac and Fannie Mae in Access to Affordable Housing

Michael Stegman, housing policy researcher for multiple think tank and education institutions, writes about the role of government-sponsored enterprises (GSEs), like Freddie Mac and Fannie Mae in the housing affordability crisis, and the ability for Congress and the Trump administration to reform the secondary mortgage market.

Much of Stegman's work focuses on the policy responses to the roots of the current housing affordability crisis in the foreclosure crisis and housing market crash of the Great Recession. Working as counselor for housing finance policy to the Secretary of the Treasury during the Trump Administration, Stegman pushed for a bipartisan reform bill referred to as Johnson-Crapo that failed to reach the Senate floor for a vote.

Among the biggest stumbling blocks to expanding support for the Senate bill in 2014 was that members on the left and right wings of both caucuses refused to sign on, over deep-seated differences in their respective views about the role of the GSEs (or their potential successors) in expanding access to affordable mortgage financing and funding for subsidized housing. Disagreements are based partly on differing perspectives on the role of the government in housing, but also on whether affordable housing resources raised in the secondary market can be responsibly and effectively deployed to expand the affordable housing supply or if they will lead to an undesirable and inefficient distortion of housing markets.

That lack of consensus persists today, according to Stegman. Affordable housing advocates concerned about the Trump administration's attacks on fair housing rules and other forms of affordable housing assistance "might not be aware of the GSEs’ longstanding obligation to support affordable housing finance," according to Stegman. Fannie and Freddie's central roles in federal housing policy, adds Stegman, "also impact the scale and effectiveness of programs and policies outside of the GSEs, including HUD, FHA/Ginnie Mae, and the VA, which support the housing needs of millions of low-income Americans."