Financial Services Members Move the Needle Forward on Housing Finance Reform

Statement

Thursday, two bills were introduced by a bipartisan group of members on the House Financial Services Committee to lay the groundwork for housing finance reform next Congress -- H.R. 6500, the Moving Housing Forward Act, introduced by Congressmen John K. Delaney (D-MD), John Carney (D-DE), and Jim Himes (D-CT) and H.R. 6487, the Taxpayer Protections and Market Access for Mortgage Finance Act introduced by Congressman Ed Royce (R-CA) and Congresswoman Gwen Moore (D-WI). Both proposals seek to address issues in housing finance through pilot programs at Fannie Mae and Freddie Mac.

"An all-of-the-above approach to credit risk transfers by the GSEs is critical, as we look for ways to decrease taxpayer exposure to future losses and maintain a stable housing market. Members of both sides of the aisle agree that the status quo of a housing market dominated by the federal government is unsustainable," said Congressman Royce.

"Owning a home has long been a key part of the American Dream. If Congress isn't ensuring access to affordable housing and a stable housing market, we are failing millions of middle class families," said Congressman Delaney. "With the current difficulty millions of Americans face getting mortgages, it's time for Congress to end the gridlock on housing finance reform and start advancing reasonable bipartisan ideas like these innovative pilot programs that will help Congress finalize larger reforms. I'm proud to work with Congressman Himes and Congressman Carney on our bill and I'm grateful for Congressman Royce and Congresswoman Moore's efforts to also advance housing reform. In these two bills, we advance reform efforts that combine the strengths of the private sector and public sector to keep an affordable fixed-rate thirty-year mortgage alive and preserve a government guarantee, while introducing greater fiscal responsibility and stability to the housing finance system. I look forward to working with my colleagues in both parties next Congress."

"Ensuring the stability of our housing market is crucial to our communities and our economy,' said Congressman Carney. "These bills seek to address critical issues at Fannie Mae and Freddie Mac, and to do so in a responsible way. While I'm disappointed that I won't be in Congress to continue this work, I'm glad we were able to keep the ball rolling."

"Congress needs to make progress on issues that affect the lives of working families in tangible ways, and it is hard to think of anything that can build wealth and change lives more significantly than home ownership," said Congressman Himes. "Our plan combines the best ideas and resources from the private and public sector, which is an approach that has wide support from the experts most knowledgeable in the field. This legislation can set the tone for a new way of doing business on Capitol Hill that puts the priorities of the American people first."

Eight years after the financial crisis housing finance reform remains unaddressed. Government conservatorship of Fannie Mae and Freddie Mac places taxpayers at risk for future bailouts and impacts access to credit for borrowers. On average, borrowers need a FICO score that is 50 points higher than they did 15 years ago. As a leading economic driver for the United States and an important asset for middle-class savings, stability in the housing sector and adequate access to mortgages for home buyers is imperative.

To address these issues, House Financial Services members have introduced two proposals that establish pilot programs at Fannie Mae and Freddie Mac. It is crucial that Congress take up legislation to fix the structure of both Government Sponsored Enterprises (GSEs) to prevent future housing crises and protect American taxpayers while also ensuring that Americans retain the dream of owning their own home.

Both bills seek to test strategies and gain feedback to better inform future Congressional actions. The Moving Housing Forward Act would test a pari passu finance pricing structure for Credit Risk Transfers, while Taxpayer Protections and Market Access for Mortgage Finance Act expands mortgage insurance to lessen risk for the enterprises.

In addition, both efforts push the regulators and GSEs to explore new and innovative means of sharing risk and advance the conversation around how to best reform Fannie Mae and Freddie Mac. These pilots provide important real-world feedback to help Congress act on comprehensive housing finance reform. The members look forward to continuing to work together to examine new structures that ensure both affordability of mortgages and fiscal responsibility.