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Washington
Housing Policy Bills Unveiled In House And Senate
WASHINGTON (3/15/13)--The future of federal housing policy continues to be hotly debated in Congress, and U.S. House and Senate members on Thursday introduced separate bills addressing the government's role in that market.

In the House, Financial Services Committee Ranking Member Maxine Waters (D-Calif.) reintroduced legislation that would strengthen the Federal Housing Administration (FHA) and help ensure that agency's long-term solvency.

The bill, known as the FHA Emergency Fiscal Solvency Act, would in part accomplish this by:
  • Giving the FHA greater flexibility to take action against loan originators that have high loan losses or take part in faulty underwriting; and
  • Authorizing FHA to require indemnification for improperly written loans.
Waters in a release noted that similar legislation was passed by the House last session. The bill is co-sponsored by Rep. Michael Capuano (D-Mass.).

Another Massachusetts legislator, Sen. Elizabeth Warren (D), joined with Senate Banking Committee colleagues Bob Corker (R-Tenn.), Mark Warner (D-Va.) and David Vitter (R-La.) to introduce the Jumpstart GSE Reform Act.

According to a release, the Senate bill would:
  • Prohibit any increase in the guarantee fees charged by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from offsetting other government spending; and
  • Prohibit the sale of preferred GSE shares without congressional approval and structural housing finance reform.
The U.S. Treasury has held the preferred GSE shares since the two institutions were taken under government conservatorship in 2008. That agency has the authority to sell or dispose of the shares.

The senators in a release said any premature actions outside of structural reform will only build obstacles to a new housing finance system. "We know our housing finance system is not sustainable in its current form, and this legislation will keep us on a path to accomplish real reforms," Warner said in the release.

A range of mortgage market reforms have been discussed, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Congressional hearings on mortgage market reforms have also been held.

The Credit Union National Association has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.
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