The big takeaway from today's "Future of Housing Finance" conference at the U.S. Department of Treasury was that everybody agreed to agree – more or less. It was a given that Fannie Mae and Freddie Mac will be put into retirement, eventually.As Treasury Secretary Timothy Geithner said in his introductory remarks, "This administration will side with those who want fundamental change."
And all dozen panelists clearly bought into Geithner and HUD Secretary Shaun Donovan's not-so-secret agenda: making mortgage credit widely available and supporting affordable housing, including rentals. Of course, this was no coincidence.
The dozen panelists were handpicked by Treasury and HUD, and the ultimate purpose of this summit was to get a broad spectrum of opinion-makers on record in support of the Obama administration's reform plans. Geithner and Donovan will need a big crowd of united supporters behind them when they take this show to Congress in the next session, and what until now has been a mostly technical policy discussion turns into full-blown circus.
But still, it isn't every day that you have agreement on anything from a group that includes executives from Wells Fargo and Bank of America; the head of the National Urban League; bond guru Bill Gross of PIMCO; economist Mark Zandi; mortgage-backed securities pioneer Lewis Ranieri; and a stellar cast of housing experts from academia, think tanks and foundations. What they all said in their own very distinctive ways was that there is no way that low-interest, long-term mortgages are going to be available to a large number of Americans without the federal government making sure, in some way, that it happens.
Browse through photos of millions of home listings or search for rentals
Mortgage rates could jump by 3 to 4 percent in a solely private market
Bill Gross of PIMCO, one of the country's biggest bond investors, says his firm is staying far away from private mortgage-backed securities because of enduring uncertainty about their performance, and will only consider investing in mortgages where borrowers make 30 percent down payments. He estimated that if privately backed mortgages were the only game in town, mortgages would cost three to four points more than they do now. Gross advocated for a complete government takeover of the mortgage markets by a single agency. Said Gross: "To suggest that there's a large place for private financing in the future of American housing finance is unrealistic."
