By Kevin Chiu
In a major effort to heal its tarnished reputation in relationship to the real estate crash, the White House will stage a conference on the future of housing finance in the U.S. as it tries to repair troubled Fannie Mae and Freddie Mac, the nation’s giant mortgage lenders.
The White House conference was announced by administration officials following the passage of Financial Reform legislation signed into law by President Barak Obama. The event marks a major cornerstone in policymakers’ efforts to reform the nation’s mortgage lending system, troubled by more than 7-million foreclosures in the financial crisis.
Mortgage industry representatives, including bankers, consumer groups and housing advocates are expected to attend the conference set for August 17. The Obama administration is trying to repair Fannie Mae and Freddie Mac, bailed-out by tax payers with the purchase of $145 billion in mortgage backed securities.
Proponents of increasing homeownership, including President George W. Bush urged Fannie and Freddie administrators to cut lending guidelines to increase homeownership. The explosion in mortgage lending drove Wall Street traders to develop financial instruments to provide the bounty of money for banks and other mortgage lenders to provide the artificial real estate bubble.
During legislative debate over financial reform, members of Congress debated the lack of reform of Fannie Mae and Freddie Mac. Critics say the administration’s failure to deal with the mortgage crisis in a larger way has contributed to at least hundreds of thousands of additional foreclosures.
The issue is a political liability for the White House since the financial crisis exploded after years of poorly directed mortgage lending practices, fraud and corruption on Wall Street and in Washington, D.C. Government officials say there have been more than 7-million foreclosures since the crisis started.
“Now is the time to build on the foundation we laid with the historic Wall Street Reform legislation,” said Treasury Secretary Tim Geithner. “The Obama Administration is committed to delivering a comprehensive reform proposal that protects taxpayers, institutes tough oversight, restores the long-term health of our housing market, and strengthens our nation’s economic recovery.”
The White House has begun work to develop proposals to reform the nation’s mortgage lending system. In April, HUD issued a set of questions for public comment on the future of the housing finance system, which received more than 300 responses from a broad cross-section of respondents. A reform proposal is expected to be delivered to Congress next January.