Affordability must remain a central feature of the housing finance system in reform of Fannie Mae and Freddie Mac, Obama Treasury officials stipulated Wednesday.
"The most fundamental question any future system must answer is this: Are we providing more American households with greater and more sustainable access to affordable homes to rent or own?" wrote Treasury officials Antonio Weiss and Karen Dynan in a post on Medium.
The officials said that the post would be the first on a series on housing finance reform, which they described as "the great unfinished business" of financial reform.
Wednesday's post is effectively a statement of preference for what should happen to the two government-sponsored enterprises as they close out President Obama's tenure still in the government's custody.
Whatever happens to the housing finance system, Weiss and Dynan wrote, there should still be "a clearly defined role for government ... in ensuring the survival of products like the 30-year fixed rate mortgage."
Fannie and Freddie make 30-year fixed-rate mortgages possible by creating a secondary market for mortgages across the country. They buy mortgages from home lenders, package them into securities, and sell them to investors with a guarantee in case the loans go bad.
The Obama administration in the past has backed Senate legislation that would have shuttered Fannie and Freddie and set up a new system in which the private sector packaged loans, with a government guarantee of 90 percent of the securities.
The Treasury officials cited the current tight credit conditions as a reason to support reform that would maintain a government backstop for mortgage-backed securities.
Because taxpayers would be taking on the risk of guaranteeing investors, they said, there should be a requirement that any company benefiting from that guarantee serve all borrowers, including in currently underserved regions.
In particular, there should be a requirement for mortgage guarantors to back loans for manufactured housing, rural housing and affordable housing, they said.
Furthermore, the Treasury officials expressed support for continued funding for affordable housing trust funds that Fannie and Freddie pay a cut of their revenues.
Those are top goals of low-income housing and civil rights groups that were wary of the 2013 Senate bill that failed to gain traction amid skepticism from both liberals and conservatives.
Conservatives, however, have criticized the extent of the government's role in guaranteeing mortgage securities, and congressional Republicans have objected to the affordable housing funds as "slush funds."
Meanwhile, current investors in Fannie and Freddie, along with some members of Congress, have said that the two companies should be recapitalized and released from the government's custody. The Obama administration has resisted those efforts even as legislation to eliminate Fannie and Freddie has stalled.