MBA President and CEO David Stevens testified last week before the House Financial Services Committee on the Republicans’ new housing finance reform legislation. Stevens made clear MBA’s priorities that Fannie Mae and Freddie Mac need to be wound down and replaced with a new system that relies primarily on private capital but also has an explicit government backstop. Stevens also expressed concerns with a number of the bill’s changes to FHA.
Also last week, the leaders of the Senate Banking Committee unveiled their own bipartisan bill to reform FHA.
Key MBA Action
MBA Testifies on Housing Finance Reform
On July 18, MBA President and CEO David Stevens testified at a marathon hearing before the House Financial Services Committee on a new comprehensive housing finance reform bill, the Protecting American Taxpayers and Homeowners Act, known as the PATH Act. In addition to proposing a final resolution to the GSE conservatorships, the bill also addresses important Dodd-Frank Act reforms and FHA single-family and multifamily programs’ long-term solvency.
In his testimony, Stevens reaffirmed that “any new [secondary market] structure should rely primarily on private capital, but must also provide liquidity throughout economic cycles, with an explicit government backstop.” He also raised concerns with the bill’s FHA provisions and urged the committee to re-examine changes to FHA’s single-family mortgage insurance coverage, repurchase requirements, and loan limit floor, as well as multifamily income limits. He stated, “Each of the policy choices in this bill carries with it the potential of reducing affordable credit options for many otherwise qualified borrowers in the single-family and multifamily markets.”
MBA’s testimony also expressed support for a number of the bill’s regulatory changes, chief among them the inclusion of the Consumer Mortgage Choice Act, which would amend the way “points and fees” are calculated to determine a loan’s Qualified Mortgage status, as well as the bills restrictions on using eminent domain to seize underwater mortgages.
The Financial Services Committee has scheduled a mark-up of the bill for Tuesday, July 23. MBA will continue to stay highly engaged in this debate and will support key amendments intended to ensure any final bill adheres to our key principals and creates a vibrant, competitive secondary market that works for lenders of all sizes and business models to support both the owner-occupied and the multifamily rental housing markets.
Senate Johnson-Crapo FHA Bill
On July 15, Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, released a discussion draft of their FHA Solvency Act of 2013. The Johnson-Crapo bill will give the FHA tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA’s reverse mortgage program.
Specifically, the bill raises the capital reserve ratio for FHA’s Mutual Mortgage Insurance Fund over 10 years to 3 percent, requires a minimum annual mortgage insurance premium, requires HUD to consolidate guidelines for lenders and servicers regarding the requirements, policies, processes and procedures and helps stabilize FHA’s reverse mortgage program by giving the HUD secretary greater operational and regulatory flexibility, while preserving opportunities for public comment.
The Banking Committee will hold a hearing on the bill this week and is expected to mark the legislation up in the committee before Congress breaks for August recess. MBA staff is holding ongoing discussions with the committee staff to help revise and improve the discussion draft.
Please click here to read Dave Stevens’ statement on the release of the bill.
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