The U.S. housing finance system needs an overhaul to reduce the role of government and taxpayers’ losses, Treasury Department Undersecretary Jeffrey Goldstein said today.
“The administration is committed to a system in which the private market -- subject to strong oversight and strong consumer and investor protections -- is the primary source of mortgage credit,” Goldstein said in prepared remarks for a speech to the Credit Union National Association in Washington.
“We are committed to a system in which the private market -- not American taxpayers -- will bear the burden for losses,” Goldstein said.
The Treasury will work with the Federal Housing Finance Administration to rein in Fannie Mae and Freddie Mac, the housing finance companies that have been in government conservatorship since 2008, Goldstein said. Tools include “gradually” increasing guarantee fees, raising capital standards and requiring higher down payments from borrowers.