The departing CEOs of Fannie Mae and Freddie Mac oversaw significant cultural and operational shifts that made the housing finance system safer and more responsive to market needs, but a tough job lies ahead for their successors.
Prior to the federal conservatorship of Fannie Mae and Freddie Mac, the government-sponsored enterprises operated in a "comfortable duopoly," with customer service below industry standards, said Freddie CEO Donald Layton during the Mortgage Bankers Association Annual Convention, ongoing this week in Washington, D.C.
Because of this, "the GSEs were not a source of innovation for decades, if ever. Now we are a source of innovation," Layton said, adding that he hopes the legacy of his time at Freddie Mac will be that he helped make the GSEs more competitive with each other.
His counterpart at Fannie, Timothy Mayopoulos, acknowledged a similar shift in attitude. "The crisis was a very humbling experience for our company. Some people felt the institution failed the market in a certain way."
"We need to engage with all the stakeholders that we serve in ways we didn't in the past," he added. "Hopefully people feel that when they interact with our company."
Both executives credited their conservator, the Federal Housing Finance Agency, for helping strengthen the housing finance system since the crisis. But Mayopoulos said there's more work to be done to address the severe shortage of housing inventory that currently exists.
"Housing affordability is a crisis," he said, adding later, "We should think of housing as core infrastructure of the country," similar to roads and transportation.
Layton added that his tenure, along with Mayopoulos and departing FHFA Director Mel Watt, will likely be remembered for helping stabilize the GSEs. Their successors' job will be to find a path toward ending the conservatorship.
Mayopoulos, whose speech at the MBA Annual was his last official duty as Fannie CEO, intends to pursue new opportunities in fintech and affordable housing. Layton, who intends to step down next year, plans to become a more active voice in the ongoing public debate over housing finance reform.
"Part of the challenge of this job is you can't speak out with all the details you have gleaned as an insider," he said.
