Are Fannie, Freddie ready for competition? 'Bring it on,' CEOs say
When it comes to possible new competitors in the secondary market, the heads of the two current outlets said they more than welcomed the possibility of additional players in their space.
"Bring it on," Hugh Frater, CEO at Fannie Mae, declared during the Mortgage Bankers Association's annual convention in Austin, Texas. "We welcome the competition, it uniformly makes things better."
But these new players should have to operate under the same rules that Fannie and Freddie Mac do and serve all aspects of the market, he added.
Ending the conservatorships will benefit both companies, said Freddie CEO David Brickman.
"Outside of conservatorship, we would be able to offer much more," he said.
Depending on the outcome, Freddie may be able to better serve affordable housing needs and innovate more once conservatorship ends, Brickman said.
But the utility model some housing reform commentators' advocate for wouldn’t work, according to Freddie Mac’s CEO.
"We're not the water company, we're more complicated than that," Brickman said.
With the regulations on guarantee fee charges, there is already a form of the utility model in place, said Frater. But there is a difference; the aim of regulating what the electric company charges is so that consumers don't get overcharged, but the goal in regulating g-fees to ensure that they don’t get undercharged, Frater said.
What will not change is Fannie Mae's commitment to its customers and its commitment to affordable housing, he said.
The two heads of the government-sponsored enterprises said they believe they will be able to work with the Federal Housing Finance Agency to turn the government's set of principles regarding housing finance reform into a plan for post-conservatorship reform.
"We think we have a viable business that private capital will be attracted to," Brickman said.