FHFA

The government-sponsored enterprises are going through a transition period. From proposals for rebuilding their capital cushions to tackling shortages in affordable housing, Fannie Mae and Freddie Mac face a number of key challenges with wide-ranging consequences this year.

The administration’s choice to regulate the government-sponsored enterprises appeared to distance himself from speculation that the White House may try to overhaul housing finance without legislation.

Rep. Blaine Luetkemeyer, R-Mo., told the mortgage giants' chief federal regulator that the Financial Accounting Standards Board’s new model for estimating loan losses could pose risk across the mortgage market.

Industry observers will be closely monitoring Mark Calabria's testimony before the Senate Banking Committee on Thursday for hints about how the Trump administration plans to proceed on mortgage finance reform.

The Senate Banking Committee will examine the nomination of Mark Calabria to oversee the regulator of Fannie Mae and Freddie Mac, as well as nominees for the NCUA board and Treasury.

Recent developments give the impression that the administration and lawmakers are in direct competition, but the ultimate framework may rely on coordination from both branches of government.

Absent some policy change, nearly a third of the loans backed by Fannie Mae and Freddie Mac could be in violation of the Consumer Financial Protection Bureau's Qualified Mortgage rule in two years.

Despite the release of Senate Banking Committee Chairman Mike Crapo's outline of a government-sponsored enterprise reform plan, most policy changes will likely come from the White House, and may even materialize this year, said Keefe, Bruyette & Woods.

As policymakers consider administrative reforms to Fannie and Freddie, they must address the problem of capital arbitrage to avoid overleveraging the mortgage system.

Just as the Trump administration appears focused on releasing a framework without Congress, the Senate Banking Committee has re-entered the policy fray with a new proposal.