As the housing crisis deepens in a volatile economic and political landscape, it is more important than ever to focus on solutions. President Trump began his administration with an Executive Order to pursue “appropriate actions to lower the cost of housing and expand housing supply, among other affordability issues.”
NHC is working with U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner and Federal Housing Finance Agency (FHFA) Director Bill Pulte to help them do just that. I recently had an outstanding meeting with Secretary Turner where we discussed Opportunity Zones 2.0 and how it can help build more housing for affordable homeownership, especially for the missing middle of the first-time homebuyer market, and our work to simplify the housing choice voucher program using AI to encourage landlord participation and maximize program impact. We’ve also gathered dozens of the most knowledgeable and influential housing experts to discuss how to effectively recapitalize and release Fannie Mae and Freddie Mac (the Enterprises) from 16 years of conservatorship in considering the proposal to create a U.S. Sovereign Wealth Fund and Treasury Secretary Scott Bessant’s interest in seeding it with Treasury’s warrants for the Enterprises’ stock.
Secretary Turner has said the changes he is undertaking are necessary because “the status quo is no longer working” and not helping the “most vulnerable people in America.” He’s not wrong. The status quo should be unacceptable to anyone who is passionate about solving these problems. Secretary Turner promised that HUD would “cut and consolidate as necessary because that is a product of change,” while promising that “we will not slow down the Department’s mission critical programs and processes. We will not stop service to our nation’s most vulnerable individuals and families. We will not disrupt the important role of field offices with sweeping office closures. We will not leave public housing authority tenants and landlords without critical resources, period.”
NHC is committed to working with Secretary Turner to improve HUD programs and processes wherever possible, embracing his call for data-driven decision-making and insisting on data-driven assessments of success. We urge him and his team to make the President’s housing affordability Executive Order the driving force behind HUD’s initiatives and policy decisions wherever applicable.
FHFA Director Pulte has said he is “laser-focused on the safety and soundness of our regulated entities as we ensure that the dream of homeownership becomes a reality for as many Americans as possible.” Last week, he posted on X that “we are turning around Fannie Mae and Freddie Mac, slowly but surely.” He noted that he met with the CEO of a major global real estate company who said he had stopped by Fannie Mae’s headquarters, and it was packed with people after years of being empty. Director Pulte saw for himself firsthand, visiting Fannie Mae on Friday and meeting with employees, one of whom expressed gratitude for deregulation efforts that enabled their department to focus on its core purpose.
To fully appreciate this comment, one has to understand the degree of regulatory supervision that has micromanaged nearly every business decision at Fannie Mae and Freddie Mac, at every level, for the past 16 years. It’s a common refrain from lenders, that they cannot get timely answers to some of the most routine questions. As Pulte moves to “run these companies like a business”, he is moving regulatory supervision to the top as he prepares the companies for release from conservatorship. It’s easy to mistake the missive as pejorative, but in fact, he understands that you can’t run a business unless you match an employee’s responsibility with the appropriate amount of authority and accountability.
It’s also a perspective he has had throughout the years I’ve known him. Criticizing the delay and expense involved in tearing down Detroit’s tens of thousands of vacant, abandoned, and blighted properties, he often attributed his ability to remove them for a fraction of the cost to his approach of leveraging his expertise and running the project “like a business.” At the Treasury Department, I had argued for a year that we should use funds from the Hardest Hit Fund to demolish these abandoned homes, blighted beyond repair, because they were like a cancer destroying everything around them. When the first $100 million showed up in Detroit, Pulte was already there.
To succeed, both he and Turner will have to be disruptors of what has not worked, but they must do so without being disruptive of what does. That won’t be easy, and will require broad consultation with stakeholders at every step of the way, while moving forward at a deliberate pace. If we get it wrong, we could do damage that could take a generation to recover from.
We must ensure these Enterprises remain safe and sound, that mortgage markets remain liquid and efficient, as they have been under bipartisan conservatorship since the Great Recession, and that the ultimate recapitalization and release from conservatorship is done to the benefit of American homeowners, homebuyers, renters, investors, and the taxpayers who stepped in to stabilize the housing markets in the first place. Change in a multi-trillion dollar industry should come “slowly but surely”.
We can do this if we work together.