Gradual agency guarantee-fee increases are going to continue, Federal Housing Finance Agency acting director Edward DeMarco reaffirmed at a Securities Industry Financial Markets Association annual meeting in New York Thursday afternoon.
“We haven’t announced any particular timeline…but I’ve given indications in the past that we intend to stay on [a path of] continued, gradual increases,” he said, in answer to a question about what future increases might be on the table and when.
“We’re doing with things like guarantee-fee pricing to gradually move to a pricing structure that we think is reflective a full adequate of private capital in these two companies [so that they are] operating [at an] appropriate market rate of return. That’s what we’re trying to get to,” he said, in answer to a separate question about how profitability fits into the plans for the agencies.
DeMarco also faced questions at the meeting about why there has been a lack of reform and decisions about hybrid public-private nature of the enterprises, as well as questions about whether there might be any assurance that the outcome of any reform would provide a return to taxpayers and would not be used to compete against the private sector.
He said the questions were “fair” but “the answers there are going to have to be determined by our elected officials” who have responsibility for the agencies’ charters.
“What we have tried to do at FHFA is make clear it is not helping the process to simply stand still and wait, that there’s a lot of constructive work that we can be doing…conserving and preserving functions of being able to execute in the secondary mortgage market.”
“Every day there’s another issuance of securities with a 30-year tail on it and we’ve got to have an…infrastructure to continue to do the work to support that,” he said.
DeMarco said the FHFA has “tried to be smart with the use of taxpayer monies to do this” and has been rebuilding the platform “with an eye toward this is something Congress can put back into the marketplace.
“That’s why we talk a lot about the platform as being a potential utility structure.”