U.S. Financial Services Committee’s Housing and Insurance Subcommittee reviews the secondary mortgage market and the role of Fannie Mae and Freddie Mac

The U.S. Financial Services Committee’s Subcommittee on Housing and Insurance held a review of the secondary mortgage market, with discussion centred on how government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac support mortgage liquidity and affordability and the potential taxpayer and systemic costs associated with weak oversight and “mission creep”. Chairman French Hill highlighted the GSEs’ role in purchasing loans and securitizing them to help keep mortgage rates lower, while warning that poor decisions and inadequate oversight can impose broader economic costs. Subcommittee Chairman Mike Flood pointed to the prevalence of the 30-year fixed-rate mortgage in the United States and the role of domestic and foreign capital in supporting mortgage credit. Witnesses emphasised that the secondary market extends beyond the GSEs and Ginnie Mae to a broader ecosystem of investors and intermediaries; called for steps to revive a Securities and Exchange Commission-registered private-label securitization market through revisions to the Reg AB II disclosure framework, with standardized data and disclosure requirements aligned with the Dodd-Frank Act’s Qualified Residential Mortgage definition; and outlined an option to transition away from the GSE model through Federal Housing Finance Agency actions to move Fannie Mae and Freddie Mac from conservatorship to receivership with liquidation via newly chartered limited-life regulated entities.