The Senate Banking Committee will vote on housing finance legislation by year’s end, according to a Bloomberg report.
Both Committee Chairman Tim Johnson (D-SD) and ranking Republican Mike Crapo of Idaho said Thursday that there was political will to move forward with housing finance reform, according to Bloomberg.
“There seems to be more traction toward moving forward with housing finance reform than there has been at any point during the five-year conservatorships of Fannie Mae and Freddie Mac,” Crapo said at a committee hearing Thursday.
The purpose of Thursday’s hearing was to begin drafting legislation incorporating elements from an earlier bill by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). The Corker-Warner bill, which has the support of President Barack Obama, would phase out Fannie Mae and Freddie Mac but still provide a government backstop for the mortgage industry.
House Republicans, however, support the Protecting American Taxpayers and Homeowners (PATH) Act, which passed the House Financial Services Committee in July without Democratic support. The PATH Act would essentially privatize home finance entirely, dismantling Fannie and Freddie without providing a replacement. The House plan also lacks support within the housing industry, which has thrown its weight behind the idea of a government backstop.
“In a fully privatized market, many middle class Americans and individuals on fixed incomes would be unable to access affordable credit or be forced into adjustable-rate mortgages pinned to interest rate variations after a limited term,” National Association of Realtors President Gary Thomas said last month.“These homeowners, faced with potentially dramatic rate increases, could experience payment shocks that rattle their financial stability, which also impacts mortgage markets and the greater economy.”