Affordability + Equity = New GSE Mission

As Karen Petrou’s Monday memo forecast, FHFA is doubling down on an already-ambitious work plan to make Fannie and Freddie the epitome of mortgage-finance equity.  Combined with planned changes to the GSEs’ affordable-housing goals, the new equitable-mortgage mission fundamentally redefines Fannie and Freddie into agents of the public good, a mission they will find hard to master if they ever hope to climb out of conservatorship.  And, of course, changing the GSEs changes the market.  FHFA’s new vision entails not only what GSEs can do for the public good, but also how they can use their market clout to make everyone else do it too.