The nation’s top housing regulator is urging politicians to finally overhaul the housing finance system.
The push from Mel Watt, the director of the Federal Housing Finance Agency, came the same day government-sponsored enterprise Freddie Mac reported a $2.2 billion profit in the final quarter of 2015.
Despite those profits, Watt warned Thursday that Freddie and its counterpart, Fannie Mae, were facing increasing risks. After eight years of functioning under a government conservatorship, Watt said the situation was growing worse at the housing giants, which guarantee the overwhelming majority of the nation’s mortgages.
“By giving this speech today, I am signaling my belief that some of the challenges and risks we are managing are escalating and will continue to do so the longer the Enterprises remain in conservatorship,” he said at the Bipartisan Policy Center. “Consequently, I believe that I have a responsibility, both as regulator and as conservator, to identify and discuss this concern more openly.”
The GSEs were brought under conservatorship after the two entities nearly became insolvent during the subprime mortgage crisis. The two were kept afloat with an injection of funds from the Treasury Department, but the arrangement required the two to remit nearly all profits back to the Treasury.