Now midway through the first session of the 116^th Congress, the House and Senate have yet to act on housing reform legislation. Most recently, Mark Calabria, Director of the Federal Housing Finance Agency (FHFA), announced that Congress should move forward with reform legislation and set a path to end the conservatorships of government-sponsored enterprises Fannie Mae and Freddie Mac (the GSEs). The Senate Banking Committee also held a hearing on June 25 to debate the issue of whether these GSEs should be designated as systemically important financial institutions, or SIFIs, and thus subject to more stringent oversight and regulation.

The GSEs have been under government conservatorships for 11 years, and there is an ongoing debate about how to restructure them to best stabilize the housing market and continue to serve a broad national market. Calabria wrote on June 11, 2019, in the FHFA 2018 Report to Congress that "it will be critical to set a path for ending the conservatorships of the Enterprises in the near future while working with Congress and the Administration to transition to a reformed housing finance system." He noted his support for Congress to pursue reform that will "reduce the risk to the taxpayer, promote private sector competition, and support sustainable homeownership."

As noted in the Senate Banking hearing by Senator Warner (D-VA), housing reform is a complicated issue. We have observed over the years as efforts to negotiate bipartisan legislation have failed in both the House and Senate. Due to this stalemate, Calabria may choose to work around Congress and pursue reform through administrative actions. He has recently claimed that he does not need to wait for Congress to act and that his goal is for the GSEs to begin the process of exiting federal control in 2020 and start building capital. Calabria has said he will be releasing the Trump administration's housing reform plan in coordination with the Treasury Department this summer.

Until then, we can expect Congress to continue holding hearings and debating the best approach to housing reform with the hope they can work closely with the administration to make sound decisions. A potential point of contention between administration officials and Congress, especially House Democrats, will be the extent of ensuring a government-guaranteed backstop is in place. Calabria has said he would support an explicit guarantee that is "limited, clearly defined, and paid for," but Democrats are pushing aggressively for a more robust backstop. Resolving this policy difference may be the most significant impediment to finalizing any bipartisan housing reform package.