Government Reorganization Plan May Transform Housing

This week, the Trump Administration announced a proposal to consolidate the federal government, including dramatic changes for the nation's housing market.

The proposal calls for the privatization of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, arguing that privatization would increase competition among corporations, resulting in lower prices. As well, it would move Fannie and Freddie's programs for low- and moderate-income buyer assistance to the U.S. Department of Housing and Urban Development (HUD). Some housing experts say that rather than making buying easier, as the proposal claims, these moves would make buying harder for those at these income levels, per Realtor.com. In 2017, roughly 70 percent of home mortgages were backed by GSEs.

In addition to taking over Fannie and Freddie's loan programs, HUD would also take over the U.S. Department of Agriculture's housing loan guarantee and rental assistance programs. The plan boasts that these changes would allow more targeted subsidies to go to these aspiring homeowners ... "If those programs are well-funded, then low- and moderate-income buyers will be OK," says chief economist Danielle Hale of realtor.com. "But the plan doesn’t say explicitly what’s going to happen to those funding levels.” In addition, "it could be harder for folks on a tighter budget to get a mortgage because there will be fewer options and programs available to them," Moody's Analytics senior economist Andres Carbacho-Burgos says.

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