WASHINGTON — Federal Housing Finance Agency Director Mark Calabria blamed "burdensome" homebuilding regulations at the local level for helping to drive up housing costs nationwide.
In a speech Monday, Calabria detailed how rising home prices are made worse by the lack of housing supply. He attributed the growing problem to government mandates, zoning restrictions, environmental regulations and building codes.
Calabria called the dearth of home construction a “national problem with local roots.”
"One of the biggest factors driving prices up and dragging supply down is the accumulation of burdensome government mandates and fees, zoning and land-use restrictions, environmental regulations, building codes, and permitting requirements," he said at an event hosted by the Department of Housing and Urban Development and the National Association of Homebuilders. Calabria added that "the most burdensome regulations come from local governments."
"Typically, it is the wealthiest communities that hike up the regulatory costs of homebuilding the highest," he said.
He suggested that the Trump administration's deregulatory agenda should provide relief to homebuilders next. “We have seen the power of deregulation at the national level the past two years in everything from energy to health care to infrastructure,” he said.
But he also said he planned to address the issue during his five-year tenure as the regulator of mortgage giants Fannie Mae and Freddie Mac.
He suggested — as he
“There is already evidence that this kind of reform would succeed if enacted,” Calabria said. “Today’s reemergent private mortgage insurance industry shows a strong appetite and capacity for private capital to bear mortgage credit risk.”
Calabria also emphasized that he would like to create a level playing field that would subject all mortgage market players to the same rules.
“Fannie and Freddie should be successful because they have the best management, the best execution, the best business practices — not because they have rules and regulations stacked in their favor,” he said.
The FHFA chief, who was sworn in in April, is currently awaiting a report from the Treasury Department and HUD on comprehensive plans for administrative and legislative reform of the government-sponsored enterprises.
FHFA has had “a couple of meetings with Treasury” about the report, Calabria told reporters after his speech.
“I’m hopeful that my views will be reflected,” he said. “I’m hopeful that that builds a framework where we then can work with Treasury on the path forward.”
In the meantime, Calabria is reviewing regulations proposed under his predecessor, Mel Watt, that include a proposed capital framework for the GSEs once they exit conservatorship, as well as a process for Fannie and Freddie to approve alternative credit score models.
“I do feel that in any exit from conservatorship, we have to have a capital rule in place,” he said. “I don’t foresee us having to reissue it, but if we do, that obviously adds a couple of months to the process. It’s just too early at this point to tell, but my hope is that we’ll have it done by the end of the year.”
But Calabria expects the proposed rule on credit score models to be completed sooner because “it’s just a lot more straightforward.”
