Craig Phillips, a top aide to Treasury Secretary Steven Mnuchin, said his department "broadly" agrees with the FHFA plan, which would return Fannie Mae and Freddie Mac to the private market and provide them an explicit government guarantee.
The tax law is expected to eliminate 300,000 affordable housing units over 10 years in part because it will reduce the value of banks’ low-income tax credits, which finance half of all affordable housing units.
For decades, Fannie Mae and Freddie Mac helped working-class Americans get mortgages. That essential and powerful role in the national economy is fading.
The FHFA is allowing Fannie Mae and Freddie Mac to invest in the credits for the first time since they entered conservatorship. Its purpose is to promote affordable housing in underserved markets.
Housing advocates are pressing Senate Republicans to expand the low-income housing tax credit program while pushing back against a House GOP plan that would eliminate financing for half of all affordable housing units.
The prospect of a lower corporate rate resulting from looming tax reform discussions may be a blessing for the industry, but it could be bittersweet for one particular group of bankers.
While Freddie Mac is moving cautiously into buying manufactured housing loans not secured by land, Fannie Mae is moving more aggressively. Industry representatives are divided on which approach is superior.
