ALTA Responds to Trump Administration’s Plans for Housing Finance Reform

September 10, 2019

ALTA commended the U.S. Department of the Treasury and Secretary Steven T. Mnuchin for developing a plan for meaningful, comprehensive housing finance reform.

The plan is in response to a presidential memorandum the Trump Administration issued in March 2019, directing the Treasury to develop a plan for administrative and legislative reform for the U.S. housing finance system.

“We are encouraged to see that the plan acknowledges the need to have sound underwriting standards to prevent any future taxpayer bailout and minimize risks to financial stability,” said Diane Tomb, ALTA’s chief executive officer. “Title insurance offers trust in the legal documents that transfers ownership. Without the documentation of the transfer of property, there would be no credit market. Our formal and reliable property records system is the bedrock of ownership in the United States and allows consumers to build wealth. Consumers and investors benefit from these strict underwriting requirements today, and Congress should make sure these underwriting standards stay strong.”

The plan has been in the works for over a year. Back in March, the chairs of our GSE Engagement Council, ALTA President-Elect Mary O'Donnell and Agent's Section Chair Bill Burding NTP, met with U.S. Treasury officials to provide the industry's views on housing finance reform. ALTA looks forward to continuing to work with the Administration and Congress to achieve successful housing finance reform that provides affordable housing for people across America, recognizes the strength of our legal system and protects consumers’ property rights. 

The reform plan includes nearly 50 recommendations for legislative and administrative actions. The cornerstone of the report is a plan to end Fannie's and Freddie's 11-year conservatorship.

"We think now is the time to recapitalize them, make them stronger and make sure that taxpayers aren't at risk and eventually raise third-party capital so that we restructure them and that in another housing downturn taxpayers are not at risk," said U.S. Treasury Secretary Steven Mnuchin.

Main Points of the Reform Plan

Legislative reform recommendations:

    • Charter new mortgage guarantors to compete with Fannie and Freddie.
    • Tailor the GSEs' affordable housing efforts to first-time homebuyers and low- and moderate-income, rural and other historically underserved borrowers.
    • Provide FHFA with more discretion on regulatory capital requirements.
    • Require mortgages eligible for GSE guarantees to comply with strict underwriting requirements.

Administrative reform recommendations

    • Leave Treasury's financial backstop in place "to ensure stability in the housing finance system."
    • Adjust the net worth sweep to help the GSEs build capital.
    • Require each GSE to maintain "capital sufficient to remain viable as a going concern after a severe economic downturn."
    • Restrict the GSEs' investments in mortgage-related assets and their retained mortgage portfolios.
    • Develop a process for soliciting public input for approval of the GSEs' new pilot programs and other new activities or products.
    • Let the Qualified Mortgage patch expire.

The plan was subject of a Senate Banking Committee hearing held Sept. 10. The committee heard from Treasury Secretary Mnuchin, Federal Housing Finance Agency Director Mark Calabria and Housing and Urban Development Secretary Ben Carson.

In July, FHFA Director Calabria outlined to the ALTA Board that one of his main goals for his term was to help put the GSEs on a path to raise capital and end the conservatorship. However, he stopped short of saying we should expect their release by the end of his five-year term.

Following the release of the plan, Calabria said, “These plans are an important step toward meaningful, lasting housing finance reform. After nearly 11 years, ending the conservatorships of Fannie Mae and Freddie Mac is now a top priority for this Administration and the FHFA.”

Contact ALTA at 202-296-3671 or