Fannie-Freddie Revamp Risk for Trump: Higher Mortgage Costs

FHFA Director Mark Calabria doesn’t want to release Fannie and Freddie unless they have sufficient capital buffers, which would mean higher mortgage costs.

(Bloomberg)—Fannie Mae and Freddie Mac’s watchdog has a vision for ending U.S. control of the mortgage giants that hinges on the companies holding more capital. But that dream could run into a cold political reality of making home loans more expensive as President Donald Trump ramps up his re-election bid.

Federal Housing Finance Agency Director Mark Calabria, who became Fannie and Freddie’s regulator in April, has said the companies need to raise capital buffers to protect against the kinds of catastrophic losses they had during the 2008 financial crisis. He doesn’t want to release Fannie and Freddie unless they have sufficient backstops to prevent another taxpayer bailout.

“It was insufficient capital that triggered the conservatorship, and it’s going to be sufficient capital that triggers an exit,” Calabria, a Trump appointee, said last month at a mortgage banking conference in New York. He added that he wants Fannie and Freddie ready to start raising funds by January.

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