by Clare Duncan, National Housing Conference
This morning the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on Chairman Scott Garrett’s (R-NJ) recently introduced legislation titled The Private Mortgage Market Investment Act. The hearing consisted of two panels. The first panel was Acting Director of the Federal Housing Finance Administration (FHFA) Edward DeMarco and the second panel included Tom Deutsch of the American Securitization Forum, Martin Hughes of the Redwood Trust, Inc, Janneke Ratcliffe of the Center for American Progress and the Center for Community Capital and Peter Wallison of the American Enterprise Institute.
Chairman Garrett’s legislation aims to encourage private capital into the residential mortgage secondary market by improving the standardization of mortgage securitizations and underwriting, increasing transparency in the secondary mortgage market and providing more certainty around investor rights, servicer responsibilities, and the parameters for future mortgage modifications. FHFA Acting Director DeMarco described the bill as a good discussion draft for what the Administration’s first option for reforming the housing finance system would look like if implemented. (In this option, the only government involvement would be through the limited role of FHA, USDA and the VA for a narrow, targeted group of borrowers.)
Many present at the hearing saw value in the bill provisions that would provide clarity and certainty in the market. However, some members expressed concern that the bill would reduce the role of the government in the market too much and hurt the availability of the 30-year fixed-rate mortgage for low-and moderate-income homeowners. Others said the bill puts too much of the market under FHFA’s guidance.
In addition to discussing the various aspects of the Private Mortgage Market Investment Act, some members took Mr. DeMarco’s presence as an opportunity to ask questions on various other issues including principle reductions, recent Fannie Mae and Freddie Mac bonuses, confirming loan limits and even the cost of oil fracking on property values.
So far this year a total of fourteen bills focused on housing finance reform have passed through the Capital Markets and Government-Sponsored Enterprises Subcommittee and are scheduled to be considered by the full Financial Services Committee in the next few months. Chairman Garrett stated at the beginning of the hearing that he looks forward to working to improve this bill in a bipartisan way. For more information on the hearing, view the bill language, visit the House Financial Services website and read our previous blog post on the bill.