The Senate is currently considering a bill, written by Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho), that would dismantle Fannie and Freddie and replace them with a new federal mortgage insurer. But in a column for the Huffington Post, National Community Reinvestment Coalition President and CEO John Taylor said the bill presented “serious problems for working Americans.”
“If the bill in its current form became law, it would do enormous harm to homeownership opportunity,” Taylor wrote. “The bill must not be given a floor vote in the Senate.”
Instead of dismantling Fannie and Freddie, Taylor wrote, Congress should focus on repairing them. He argued that the mortgage finance giants needed to be regulated properly and operated transparently, and that they needed to maintain sufficient cash reserves. Eliminating them, however, would be “reckless and foolish,” he wrote.
“There has been an ill-advised and misplaced push to get rid of Fannie Mae and Freddie Mac. Doing so would be a mistake,” he wrote. “Fannie Mae and Freddie Mac have affordable housing goals, which help to make sure that the market serves underserved communities, and which have had a tremendous positive impact.”
The current bill eliminates affordable housing goals and doesn’t do enough to ensure that all creditworthy borrowers have access to mortgage credit, Taylor wrote.
“The bottom line is that less conventional lending to creditworthy families means fewer homeowners, which hurts communities and the economy at large,” he wrote. “Therefore, making sure that responsible credit is made available to all creditworthy borrowers is in our national interest.”
Congress should go back to the drawing board on its plans for reforming Fannie and Freddie, says the head of a housing advocacy group.