• News
  • SAN DIEGO
  • Real Estate

Fannie Mae CEO looks forward despite uncertain future

As Congress readies to debate its future, Fannie Mae is building a "foundation of new realism" for the nation's housing market.

Michael Williams, president and CEO of Fannie Mae (OTC: FNMA), said his company has prioritized providing accurate information to policy makers as they address the nation's role in the housing market, not proposing alternatives or entering the debate. Williams was in San Diego Thursday to speak at the Burnham-Moores Center for Real Estate at the University of San Diego's 15th annual real estate conference.

In February, the Treasury released a white paper proposing a menu of options for the future of government involvement in the mortgage industry. Congress is expected to begin debate on the issue in the spring, and Williams called the Treasury's proposal a "starting point" for those negotiations.

Opting against discussing the future of his company, as well as those of Freddie Mac (OTC: FMC), Ginnie Mae and the Federal Housing Authority (FHA), he instead focused on the company's role in instilling confidence and long-term health in the nation's housing market. He also sought to clarify the rationale behind its actions over the last two years.

The government-sponsored entitity is "creating solutions regarding practical, long-term changes" in the housing market, Williams said.

Fannie Mae has provided the market with $1.5 trillion in mortgage liquidity since 2009, he said. With private investors vacating the market in 2008, this assistance was essential in helping 5 million families buy homes and another 4 million refinance their mortgages. In California, more than 900,000 families purchased homes with the help of Fannie Mae, and another 750,000 went through mortgage modifications.

In 2010, Fannie Mae helped 400,000 homeowners avoid foreclosure, according to Williams.

Williams said the company is encouraging sustainable lending by returning to long-term, fixed-rate loans as the standard mortgage instrument, while also emphasizing better loan documentation and appraising standards.

The company provided $17 million in debt financing for rental housing in 2010. With 1.5 million more households forming per year in the country over the next decade, he said providing support for rental housing is of renewed importance. Many of these new households will be the result of immigration, and will initially rely on renting, not owning.

Loans originated in 2009 now comprise more than 40 percent of Fannie Mae's book of business, Williams said. Those loans should be profitable over their lifetimes, he said, which would help mitigate losses from the legacy loans in the company's book.

He said the company remains committed to its mission of providing affordable housing, but its goals have become more rational than they were previously.

During a question-and-answer session following his prepared remarks, Williams deferred to Fannie Mae's Chief Economist Douglas Duncan on the near-term future of interest rates.

Duncan said he expected interest rates to increase modestly this year, and that he didn't expect the Fed to increase the short-term interest rate until sometime next year. Unrest in the Middle East, he acknowledged, is raising gas prices and has re-introduced the spector of inflation.

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

User Response
0 UserComments

Leave Your Comment

Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

SDDT Comment Policy: SDDT encourages you to add a comment to this discussion. You may not post any unlawful, threatening, defamatory, obscene, pornographic or other material that would violate the law. All comments should be relevant to the topic and remain respectful of other authors and commenters. You are solely responsible for your own comments, the consequences of posting those comments, and the consequences of any reliance by you on the comments of others. By submitting your comment, you hereby give SDDT the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying and other information you provide via all forms of media now known or hereafter devised, worldwide, in perpetuity. SDDT Privacy Statement.

Subscribe Today!