Since 2008, mortgage purchasers Fannie Mae and Freddie Mac have operated under government conservatorship. Now, reform of these Government Sponsored Enterprises (GSE) is a primary focus of the FHLBank system and FHLBank Topeka. A change in this construct will naturally have a profound impact on housing, and the economy as a whole.
Though the general timeline for reform appears gradual, under the terms of the preferred stock purchase agreements that went into effect when they were pulled into conservatorship, the GSEs capital base will be totally eliminated in 2018. At that point, unless Congress engineers a relief valve, the pressure to find a solution increases.
In the meantime, various stakeholder groups are starting to release GSE reform guidelines. Additionally, a bi-partisan Senate working group is soliciting input, and the Trump administration continues to signal intent to be directly involved in reform efforts.
Because of the success and stability of the FHLBank cooperative business model, and our ongoing support for affordable housing and community development, we are continually evaluating each of these potential remedies as the process unfolds. As always, we would be pleased to offer support and feedback on this critically important evolution.