Housing Finance Reform: First Do No Harm – Wall Street Journal

A home under construction in Vineyard, Utah, March 12.


George Frey/Bloomberg News

In light of the urgent need to reform the nation’s housing finance system, it is deeply troubling to see Peter J. Wallison and Edward J. Pinto reflexively rehash worn-out scare tactics of an impending $7 trillion taxpayer bailout and housing bust if any plan is approved that falls short of complete privatization (“The Coming Trump Housing Crisis,” op-ed, April 5).

The pair unjustly turn their ire on President Trump’s recent Memorandum on Federal Housing Finance Reform because it acknowledges the need for an appropriate federal role and seeks to ensure that the 30-year, fixed-rate mortgage remains readily available and affordable for working American families.

The Trump plan represents a positive step forward, but Messrs. Wallison and Pinto would have us believe that it is simple to privatize the mortgage market and get taxpayers off the hook for possible future bailouts without disrupting the nation’s housing finance system. History shows that when times get tough, private mortgage credit has fled the market, leaving government-supported mortgage loans as the primary or only option for qualified buyers. Privatization won’t prevent a taxpayer bailout. It virtually assures that a bailout will eventually be necessary.

Clearly, the status quo is unacceptable. Uncertainty about the future of

Fannie Mae


Freddie Mac

now in their 11th year of conservatorship, is hindering investment, slowing the housing market and increasing downside risks to the broader economy.

President Trump and Sen. Mike Crapo have offered thoughtful proposals to implement needed reforms. Enabling more qualified borrowers to have access to affordable home loans while also boosting affordable rental opportunities for those who choose or need to rent will build a healthy housing market, which is a cornerstone of a strong U.S. economy.

Greg Ugalde

Chairman, National Association

of Home Builders


The concept of Fannie and Freddie is right, as long as financial discipline is the priority. When politicians and bureaucrats get too involved, and then decline accountability when the things go terribly wrong, we get results like 2008. Let accomplished financial executives manage Fannie and Freddie with a strong board of directors and strong lending policies and controls and America will get a highly functioning housing finance system and only those who can assume the responsibility of owning a home actually get a mortgage. There is nothing wrong with being a renter if that fills the need for shelter.

Keep the politicians out of it.

Jeff Solberg

Bonita Springs, Fla.

Peter Wallison and Edward Pinto argue how President Trump could reduce Fannie and Freddie’s footprints by opening up larger portions of the housing finance market to the private sector in part because the private market offers rates competitive with those of the GSEs. Really? In my 32 years of originating mortgages, the private sector has never come close. Today, for example, private market-conforming fixed rates hover at 6% while GSE rates are 4%. A two-percentage point interest rate jump would stop housing in its tracks and create a different sort of housing crisis: plunging affordability.

Jeff Lazerson

President, Mortgage Grader

Laguna Niguel, Calif.

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