Here Comes a Housing Pitch

Update 358 — Here Comes a Housing Pitch:
Can Mitch Afford to Swing and Miss?

The major piece of unfinished business from the financial crisis of 2008 is housing finance and housing policy generally.  The GSEs, under conservatorship since then, and long-standing problems in housing finance and the underlying market have been awaiting comprehensive reform.  The relevant House and Senate Committees are at work. The administration seems on board. But nothing happens around here without Mitch.

Is housing reform finally at the must-pass stage for the Senate Majority Leader on par with nominating Trump judges and officials (and maybe lifting the debt limit)?  And what is House Financial Services up to on this score? Read on.

Good weekends all..

Best,

Dana

————

GSE Reform State of Play

Reportedly, Trump administration officials are confirming plans to enact reforms that would return the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, to private ownership. For many, this might feel like GSE reform Groundhog Day.  

Since the financial crisis, secondary mortgage market facilitators Fannie Mae and Freddie Mac have been under government conservatorship. Congress has made efforts over the past decade to release the GSEs from government control, but disagreements over other housing policies have continually scuttled negotiations.

In 2014, Sens. Tim Johnson and Mike Crapo put forward a GSE reform bill that advanced through the Senate Banking Committee, 13 votes to 9, with six Ds and seven Rs voting yes. Progressive Democrats were opposed, with Sen. Warren arguing that the bill would reduce the pool of qualified borrowers for Fannie and Freddie mortgages. Then-Majority Leader Reid believed the bill would split the Democratic Caucus, so it never came to the floor for a full vote.

Last Congress, then-Chair of House Financial Services, Jeb Hensarling, introduced a bipartisan proposal with Democratic Reps. John Delaney and Jim Himes. The hybrid proposal would have returned GSEs to private ownership, while directing mortgage guarantor and wholly-owned government corporation, Ginnie Mae, to take on some of the existing roles of the GSEs. It got a hearing late in the 115th Congress, but did not receive a markup, let alone a floor vote.

Whither the Crapo Proposal?

In early February this year, Senate Banking Committee Chair Crapo proposed a new version of his bill, The Housing Finance Reform and Taxpayer Protection Act of 2014. Instead of replacing Fannie Mae and Freddie Mac with a new Federal Mortgage Insurance Corporation (FMIC), as the 2014 bill stipulated, Crapo’s 2019 plan would turn Fannie and Freddie into private guarantors. Eligible mortgages would be securitized by Ginnie Mae.

Both the current proposal and the 2014 legislation establish a New Market Access Fund to address affordable housing issues. They also maintain that the federal government should play a role in ensuring a competitive, sustainable mortgage market to American consumers. Both plans also increase the role of private capital as one solution to the affordable housing crisis.

Although Senate Democrats have been a part of bipartisan efforts to reform GSEs in the past, they may face pressure from the new face of the party today. It is possible that Chairman Crapo and Ranking Member Brown negotiate something smaller, but with 2020 fast approaching, it seems unlikely.

Housing on the HFSC Agenda

In 2014, Rep. Maxine Waters unveiled the Housing Opportunities Move the Economy (HOME) Forward Act. The bill proposed ending Fannie and Freddie altogether and replacing them with a new lender-owned “Mortgage Securities Cooperative” that would be the single issuer of federally guaranteed mortgage-backed securities.

Last Congress, Rep. Waters pushed back on Rep. Hensarling’s GSE reform proposal, saying that it didn’t do enough to address affordable housing, especially in underserved areas. Rep. Waters’ 2014 GSE reform proposal included increased funding for the National Housing Trust Fund and Capital Magnet Funds, which ensure affordable rental housing access to low-income households.

In July 2018, Rep. Waters announced that GSE reform would be a top priority for the House Financial Services Committee (HFSC) if Democrats took back the House. Since then, she has focused more on affordable housing. But with GSE reform purportedly moving in the administration and a proposal on the table in the Senate, Rep. Waters has an opportunity to set her own GSE reform agenda as chair of HFSC.

If At First You Don’t Succeed…

Sen. Crapo’s GSE reform proposal would be the 15th congressional attempt at GSE reform since the financial crisis. In theory, there should be room for a bargain, as similar proposals have achieved bipartisan support. Whether a deal will be made this Congress is an open question. With the Administration walking back its ‘imminent’ reform announcement earlier this year, but announcing its readiness to release a plan at the end of last month, it is unclear what role Trump’s government will play.

A White House-led plan would not be ideal. Not only would it likely forgo much of what House Democrats would try to leverage out of a Congressional deal, an executive-led effort would likely be rushed, creating potential market risk.

A Democratic administration could reverse any changes made by the current one, but Trump officials could set in motion changes that could be hard to undo. Will the Executive Branch finally take the GSE reform reins from Congress? For now, administration officials say they are putting “finishing touches” on a proposal.

32 thoughts on “Here Comes a Housing Pitch”

  1. An impressive share! I have just forwarded this onto a co-worker who had been doing a little research on this.
    And he actually bought me breakfast simply
    because I stumbled upon it for him… lol. So allow me to reword this….
    Thank YOU for the meal!! But yeah, thanx for spending the time to discuss this issue here on your website.
    asmr 0mniartist

  2. Fantastic beat ! I would like to apprentice
    while you amend your site, how can i subscribe for
    a blog site? The account helped me a acceptable deal.
    I had been tiny bit acquainted of this your broadcast
    offered brilliant transparent concept 0mniartist asmr

  3. Hi! Do you know if they make any plugins to protect against hackers?
    I’m kinda paranoid about losing everything I’ve worked
    hard on. Any recommendations? asmr 0mniartist

  4. Appreciating the persistence you put into your site and in depth information you offer.
    It’s awesome to come across a blog every once in a while
    that isn’t the same out of date rehashed material. Great read!
    I’ve bookmarked your site and I’m adding your
    RSS feeds to my Google account. asmr 0mniartist

  5. I’m not sure why but this site is loading very slow for
    me. Is anyone else having this issue or is it a problem on my end?
    I’ll check back later and see if the problem still exists.

  6. Hi my loved one! I wish to say that this article is awesome, great written and come with almost all vital infos.
    I would like to look extra posts like this .

  7. A motivating discussion is definitely worth comment. I believe that
    you ought to publish more on this topic, it may
    not be a taboo matter but generally folks don’t discuss these issues.
    To the next! All the best!!

  8. Hey there! Do you know if they make any plugins to protect
    against hackers? I’m kinda paranoid about losing everything I’ve worked hard on. Any suggestions?

  9. Excellent beat ! I would like to apprentice while you amend
    your site, how can i subscribe for a blog website?
    The account helped me a acceptable deal. I had been tiny bit acquainted of this your broadcast provided bright
    clear idea

  10. scoliosis
    Having read this I believed it was very enlightening. I
    appreciate you taking the time and effort to put this short article together.
    I once again find myself spending a lot of time both reading and commenting.
    But so what, it was still worth it! scoliosis

  11. scoliosis
    Hi there! This article couldn’t be written much better!

    Going through this post reminds me of my previous roommate!

    He constantly kept preaching about this. I’ll
    forward this post to him. Fairly certain he’s going to have a
    great read. Thank you for sharing! scoliosis

  12. Excellent way of describing, and pleasant article to take
    facts on the topic of my presentation subject, which i
    am going to convey in college.

  13. We stumbled over here coming from a different web address and
    thought I might as well check things out. I like what I see so now i am following you.
    Look forward to checking out your web page for a second time.

  14. I was recommended this website by my cousin. I’m not sure whether this post
    is written by him as no one else know such detailed about my trouble.

    You’re wonderful! Thanks!

  15. Definitely imagine that that you stated. Your favourite justification appeared to be
    at the internet the simplest thing to take note of.
    I say to you, I definitely get annoyed whilst folks think about
    concerns that they just don’t realize about.

    You controlled to hit the nail upon the highest and outlined out the whole thing with no need side effect
    , folks can take a signal. Will probably be back to get more.
    Thanks

  16. I’m curious to find out what blog system you have been working with?
    I’m having some minor security issues with my latest site
    and I’d like to find something more safe. Do you have any suggestions?

Leave a Comment

Your email address will not be published. Required fields are marked *