Fannie Mae, Freddie Mac overhaul in the works but may not happen soon

Earlier this month, ending the conservatorship of mortgage giants Fannie Mae and Freddie Mac seemed like an imminent possibility – but new developments suggest the process may not happen anytime soon.

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Following a report that the Trump administration was looking to potentially act without Congress to end federal control of the housing authorities, officials have since indicated that will not be the case.

On Wednesday, Federal Housing Finance Agency acting director Joseph Otting wrote a letter to lawmakers saying that he welcomed their perspective on terminating the conservatorship, as reported by Bloomberg.

“As we begin the journey of evaluating the enterprises and developing a framework for ending conservatorship, I would welcome your insight and perspective," Otting wrote.

Otting had reportedly said during a previous, private meeting that a proposal to release Fannie and Freddie from federal oversight would be unveiled soon by the Treasury Department, and that the White House was willing to move ahead without Congress.

The comments drew criticism and a response from the White House, which said on Tuesday it would work with Congress to overhaul the government-sponsored housing authorities.

A White House spokesperson said proposed changes will be made public “shortly,” and no final decisions have been made as to what will be included in the new framework.

Fannie and Freddie have been operating within the government since being bailed out for nearly $200 billion at the height of the financial crisis.

The two government-sponsored enterprises do not originate loans – instead they purchase and guarantee them on the secondary market.

Privatizing the entities has been a longtime goal of U.S. Treasury Secretary Steven Mnuchin, who told FOX Business in November 2016 that the administration had to “get them out of government control.”

“It makes no sense that these are owned by the government and have been controlled by the government for as long as they have,” he said, promising at the time to execute the separation “reasonably fast.”

Taking Fannie Mae and Freddie Mac out from under government control could be a boon to shareholders – who have essentially had shares wiped out. As of 2012, profits from Fannie and Freddie have been redirected to the U.S. Treasury.

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Mnuchin has not specified how he would reform the housing agencies, though he told Bloomberg in December that he preferred to proceed with bipartisan legislative support.

Mel Watt, appointed under former President Barack Obama, left the FHFA in January. Trump has nominated Mark Calabria, chief economist for Vice President Mike Pence, to take his place.