Having covered the past and present of the GSEs in the first two parts of this series, we now turn to their future in the third and final installment.
Given the extensive media coverage surrounding potential structures for the GSEs if they were to be restructured, Tim begins by evaluating the different permutations wherein the GSEs could either remain in conservatorship or be released, with or without an explicit or implicit government guarantee.
Mark underscores that focusing on the structure of the GSEs before defining the objective—specifically, the type of mortgage system we seek to establish and how to legislate around it—puts the cart before the horse.
Building on this, Josh outlines key objectives for the mortgage system, including promoting sustainable homeownership, maintaining affordable mortgage costs, and ensuring market discipline.
Tim then brings the discussion full circle by asking Mark and Josh about the objective of expanding access to affordable housing, which ultimately depends on market pricing.
To ensure that market pricing remains aligned with this objective, Mark highlights the importance of consistent and transparent communication, noting that market participants rapidly incorporate news—or rumors—of potential changes, and that unmanaged speculation can lead to unnecessary market disruptions.
All of this and more are covered in this final installment of our three-part series on GSE reform. We will continue to monitor and analyze this evolving area of housing finance and look forward to your continued engagement.
Listen to the podcast below and let us know what you think!