The federal regulator who oversees Fannie Mae and Freddie Mac is pushing to speed up the mortgage giants’ exit from 12 years of government control but has yet to reach an agreement he needs with Treasury Secretary Steven Mnuchin, the Wall Street Journal reported. Mark Calabria, a libertarian economist who heads the Federal Housing Finance Agency, has made it a priority to return Fannie and Freddie to private hands, a goal shared by Mnuchin. How that is done could affect the cost and availability of mortgages backed by the companies, which guarantee roughly half of the $11 trillion in existing home loans. Completing the complex process before President Trump’s term ends on Jan. 20 is a long shot, and President-elect Joe Biden is considered unlikely to continue the effort. But Calabria and Mnuchin could succeed in taking steps that would be difficult to reverse, such as significantly restructuring the government’s stakes in the firms. The Treasury secretary must agree to any move to alter the terms of either the companies’ bailout agreement or the government’s stakes. One person familiar with the effort said Mnuchin is supportive of locking in a path to private ownership but mindful of steps that could disrupt the housing-finance market. Calabria has met twice recently with Mnuchin to discuss an expedited exit of the companies from government control, most recently the week of Nov. 9. The government seized control of Fannie and Freddie to prevent their collapse during the 2008 financial crisis through a process known as conservatorship, eventually injecting $190 billion into the companies. In exchange, the Treasury received a new class of so-called senior preferred shares that originally paid a 10 percent dividend. It also received warrants to acquire about 80 percent of the firms’ common shares. One option under discussion would entail a complex capital restructuring that would eventually reduce the government’s stakes in the firms. Such a move would be aimed at opening the door to new, private investment. Still, it is a delicate issue because U.S. officials don’t want to cause investors to doubt the government’s backing of the firms, which have helped pin mortgage rates at record low levels during this year’s pandemic-induced economic slump.
