By 2014 President Steve Brown
NAR recognizes that the current system for secondary mortgages is unsustainable. We fully support moving forward with legislative reform of Fannie Mae and Freddie Mac. NAR, however, insists than any specific legislative proposals must protect the interests of all consumers.
That’s why we created the Housing Finance Work Group. It will examine the reform bill introduced by Senators Johnson and Crapo. The Work Group members represent a broad sector of our association’s membership, including those who are concerned that the current legislation will have a negative impact on underserved communities.
It is vital that we have many voices in this discussion so as to develop policies that have wide support from our membership. The Work Group met in April to review the pending legislation and they already have begun to develop policy recommendations for our Leadership Team.
As the Work Group re-affirmed, NAR believes the secondary mortgage market must be reformed to protect taxpayers, yet reform must also guarantee that the government plays a role in ensuring access to credit during all economic conditions.
Therefore, we urge lawmakers to move forward on comprehensive, bipartisan legislation that will protect both taxpayers and the flow of capital to our markets including a 30-year fixed rate mortgage product.
We believe the bill introduced by Senators Johnson and Crapo is a solid starting point. It phases out Fannie Mae and Freddie Mac, but retains the federal government as an insurer of last resort, much like the FDIC is the insurer of last resort for troubled banks.
The bill continues the current conforming loan limits and a lower down payment for first-time homebuyers. It also ensures that private investors have “skin in the game” and would bear their share of any losses.
We do remain concerned that the Johnson-Crapo’s proposal may raise overall mortgage costs for consumers, and this legislation could lead to a market dominated by large financial institutions. NAR strongly supports equal and competitive access for financial institutions of all sizes.
I will have more to report in a few weeks about the progress of our Work Group and an update on the legislative discussions.