Fannie Mae

Industry observers will be closely monitoring Mark Calabria's testimony before the Senate Banking Committee on Thursday for hints about how the Trump administration plans to proceed on mortgage finance reform.

After the State of the Union speech Tuesday night, members of the House and Senate banking committees said they were intent on trying to address the biggest unresolved piece of financial services policy: housing finance reform.

Recent developments give the impression that the administration and lawmakers are in direct competition, but the ultimate framework may rely on coordination from both branches of government.

Absent some policy change, nearly a third of the loans backed by Fannie Mae and Freddie Mac could be in violation of the Consumer Financial Protection Bureau's Qualified Mortgage rule in two years.

Just as the Trump administration appears focused on releasing a framework without Congress, the Senate Banking Committee has re-entered the policy fray with a new proposal.

The Senate Banking Committee chairman released an outline for overhauling the U.S. housing finance system more than 10 years after the government put Fannie Mae and Freddie Mac into conservatorship.

As policymakers consider administrative reforms to Fannie and Freddie, they must address the problem of capital arbitrage to avoid overleveraging the mortgage system.

The agency's acting director said he welcomes lawmakers' “insight and perspective” on how to end the conservatorships of Fannie Mae and Freddie Mac.

The Trump administration will offer a framework and get Congressional input on housing finance; some online banks offer more than 2% interest on deposits.

A White House spokeswoman said the administration wants to work with Congress on a housing finance reform plan, providing evidence that changes might not be imminent.