Indeed, Treasury Secretary Steven Mnuchin has all but veri-
fied the Trump administration’s goal to take the GSEs out of
conservatorship. During his confirmation hearing, he told the
Senate that “we shouldn’t leave Fannie and Freddie alone for the
next four or eight years without reform.”
Then there is the new FHFA director, who will have a strong
influence on the GSEs’ lending mandates and caps. Currently
awaiting confirmation by the Senate, White House nominee
Mark Calabria would replace Mel Watt, the Democratic appoin-
tee whose term ran out last year.
A longtime housing reform advocate and an outspoken critic
of the GSEs, Calabria currently serves as chief economist in Vice
President Mike Pence’s staff. Prior to that, he was director of
financial regulation studies at the Cato Institute, which describes
itself as “a think tank dedicated to the principles of individual
liberty, limited government, free markets and peace.”
The MBA lauded Calabria’s appointment in a statement, but
so far, the broader market’s response has been sanguine.
“Exactly what will unfold and how the role of the GSEs and
private capital play out remains to be seen, but we are encour-
aged that both Calabria and Otting see the private sector as part
of the solution for transferring credit risk away from taxpayers,”
MGIC Investment Corp.’s chief executive officer, Patrick Sinks,
observed in a recent earnings call.
Another data point: even though CRE professionals are
closely watching the government for any further developments,
82% of respondents to a Berkadia poll still expect the GSEs to
provide most of the financing to the market this year.
Ernie Katai, executive vice president and head of production
at Berkadia, posits that there may be more smoke than actual
fire around the issue of GSE reform, as the administration
focuses on other priority issues. “Until we have further clarity on
what reform will look like,” he says, “we expect investors to keep
their foot on the gas when it comes to deal activity.” ◆
3% GROWTH FOR
DEBORAH JENKINS | FREDDIE MAC
THE MARKET, AND
FOR RENTING VERSUS
ASSETS WILL CONTINUE TO BE THE PREFERRED
INVESTMENT IN COMMERCIAL REAL ESTATE.