A Modest Suggestion for a New Era


Americans have a lot invested in residential real estate, about $12 Trillion by way of traditional first mortgages on single-family homes. While that number may be shocking, 70% of that debt has been financed by four government agencies Freddie Mac and Fannie Mae (GSEs), the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

Just because those government agencies work toward the same goal of getting working- and middle-class people into homes, doesn’t necessarily mean that those agencies communicate well. And keeping up with all the moving parts of these agencies can be a hassle.

Knowing this, Don Layton the Senior Industry Fellow for the Joint Center for Housing Studies at Harvard University, also the former CEO of Freddie Mac, proposes the idea of a single, unified annual report from the four government agencies to show how well they are utilizing taxpayer support in order to reach their goal of successfully improving homeownership.

This proposed report would also provide timely reporting on how much taxpayer support is being received by the different racial groups, rural families, Low- to middle-income families, and so on. It would also analyze where and how subsidies are used and the total effect of them, data which is not available today.

“There is an obvious public policy need for there to be clear and frequent reporting of how well the taxpayer subsidies that go through the four agencies result in their goals being delivered, especially with respect to all the identified groups of families who are underserved” Layton said in his report. “The best we have today to meet this need for information is Home Mortgage Disclosure Act (HMDA) reporting, collected by the Consumer Finance Protection Bureau. However, HMDA is not directly focused on the four agencies or how well they deploy their taxpayer subsidies, but instead on how well underserved communities access mortgage credit from all sources.

“It is my view that such reporting would significantly complement HMDA and other sources, supporting a more efficient focus on the question of how well, and at what cost to the taxpayer, the four government agencies are supporting homeownership both broadly and with respect to the beneficiaries of their specific mission activities,” Layton Continued.

In order to make this report a reality, it would only take like-minded thinking of three people key people: Marcia L. Fudge. the Secretary of the Department of Housing and Urban Development, Denis Richard McDonough, the Secretary of the Department of Veterans Affairs, and Sandra L. Thompson, the Acting Director of the FHFA. No additional action or legislation by congress should be necessary to get this idea off the ground.

Layton further suggests that the burden of the report should initially be put on the GSEs, who have the advantage of their size and funding to “flexibly finance and implement this type of initiative.”

Click here to read the full report from Layton, which goes in depth into his reasoning for this proposal.