HUD Chief on New Name & Cost-Cutting at Fannie, Freddie

Scott Turner, recently confirmed as the new Secretary of the Department of Housing and Urban Development (HUD), outlined an ambitious agenda to restructure and modernize the agency, as reported by WSJ.

Central to his plans is a cross-government effort to privatize the government-sponsored mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC). Turner also aims to streamline HUD, improve cost efficiency, and possibly change its name to better reflect its broader reach, especially in rural and tribal communities.

Taking Things Private

A former NFL player and Texas lawmaker, Turner is taking on one of the most complicated and politically sensitive housing issues: the privatization of Fannie Mae and Freddie Mac.

Both government-backed firms have been in conservatorship since the 2008 financial crisis, and Turner’s role will be key in navigating this process. Turner hopes to transition these firms out of government control by working with the Treasury Department, Congress, and the Federal Housing Finance Agency (FHFA).

“There are partners that will be at the table and obviously we’ll be one of them,” Turner said, emphasizing his role as a “quarterback” in the process. The goal is to free these entities while maintaining a stable housing market.

However, some critics warn that privatizing the firms could lead to higher mortgage rates and reduced investor confidence, making the transition delicate.

Cost-Cutting Efficiency

As part of his broader vision, Turner plans to initiate a thorough review of HUD’s programs and policies, aiming to root out inefficiencies and streamline operations.

He intends to implement cost-cutting measures while maintaining the agency’s mission of improving home affordability. This includes revisiting HUD’s diversity, equity, and inclusion (DEI) initiatives, which have been a point of contention in the current political climate.

What’s in a Name?

Turner also sees the need for HUD to evolve beyond its traditional image. He is considering a rebranding of the agency to better capture its expanded scope, including a greater focus on rural and tribal communities.

“The current name doesn’t reflect what we do or what we should be doing,” Turner explained. However, such a change would require significant discussion and support from Congress.

Impact on Housing

Turner’s agenda comes at a pivotal time for the US housing market. With elevated mortgage rates and high prices pricing out many potential buyers, Turner’s focus on easing federal regulations and promoting development in underserved areas like opportunity zones could help address these issues. 

Turner’s push for more building on federal lands, including urban, rural, and tribal zones, is also expected to be a key part of his strategy.

Challenges Ahead

Scott Turner’s confirmation as HUD chief marks the beginning of an era where sweeping changes are expected. Yet despite the lofty goals, Turner faces many challenges. The privatization of Fannie Mae and Freddie Mac has been a contentious issue for years, with numerous attempts at reform falling short due to the complexity of the process.

Additionally, with many Americans struggling to afford homes, HUD’s cost-cutting and regulatory easing measures will need to strike a delicate balance to avoid exacerbating affordability issues.

Scott Turner’s confirmation as HUD chief marks the beginning of an era where sweeping changes are expected. His focus on privatizing Fannie Mae and Freddie Mac, streamlining HUD, and possibly rebranding the agency reflects a broader shift towards efficiency and market-driven solutions.