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Waters enters bill into housing finance reform debate
WASHINGTON (3/28/14)--Entering the policy discussions involving changes to the country's existing housing finance system, Rep. Maxine Waters (D-Calif.) this week introduced legislation that would create a cooperative group of mortgage lenders to back home loans.
The discussion draft, known as the "Housing Opportunities Move the Economy (HOME) Forward Act of 2014," would establish a new lender-owned Mortgage Securities Cooperative (MSC). That entity would be the only issuer of government-guaranteed securities. It would be governed on a one-member, one-vote basis, and capitalized by lenders based on mortgage volume, the House Financial Services Committee said in a summary of the proposal.
The co-op would replace government-sponsored enterprises Fannie Mae and Freddie Mac, which would be wound down over a five-year timeline.
The bill would also:
  • Maintain the affordable 30-year fixed-rate mortgage;
  • Establish a new regulator known as the National Mortgage Finance Administration, which would oversee the MSC;
  • Ensure equal access for small lenders;
  • Provide transparency and standardization across the mortgage market through uniform pooling and servicing agreements and new databases to facilitate access to mortgage data; and,
  • Ensure access to affordable rental housing.
Housing finance reform bills have also been introduced by the Senate Banking Committee and Waters' House Financial Services Committee colleague Rep. Jeb Hensarling (R-Texas). CUNA this week met with White House officials to discuss credit union concerns ahead of a vote on the Senate bill, and CUNA Chief Economist Bill Hampel last year discussed credit union priorities for a future housing finance market at a conference convened by Waters.
CUNA has repeatedly underscored that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way.
Other CUNA suggestions for a future mortgage market include:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.
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