The chief U.S. housing regulator on Wednesday expressed optimism that the deep downturn in the nation's property market was finally over, but said the future of the government's role in housing finance needed to be settled for long-term health.
"I am cautiously optimistic that the signs of stability - and in some areas, strength — that have started to emerge in certain sectors of the housing market are signals that it is beginning to recover," Edward DeMarco, acting director of the Federal Housing Finance Agency, told the Exchequer Club.
FHFA oversees Fannie Mae and Freddie Mac , the nation's two dominant mortgage finance firms, which were placed in a government conservatorship in 2008 as mortgage losses threatened their solvency. They have received almost $190 billion in taxpayer funds, of which about $50 billion have been paid back to the Treasury in the form of dividends.
"It is vital to the long-term health of our country's housing and financial markets that our elected leaders seek to bring the conservatorships to a conclusion, and to define the government's role and requirements for housing finance in the future," DeMarco said.
The government's footprint in U.S. housing has grown sharply since 2006, when the nation's housing bubble burst and private credit dried up. Fannie Mae, Freddie Mac and the Federal Housing Administration now account for nearly nine of every 10 mortgages.
Democrats and Republicans alike agree on the need to scale back that support, but they disagree on the precise role Washington should play in supporting homeownership.
Fannie Mae and Freddie Mac buy mortgages from lenders and repackage them as securities for investors to provide a steady stream of liquidity to the market. Both have turned profits recently, helped by improving housing market conditions, and they have been able to curtail their reliance on taxpayers.
U.S. homes prices have risen for eight straight months, a report showed earlier this week, and sales activity has also picked up, although data on Wednesday showed sales of new homes have languished.
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