Proposals to overhaul the housing finance system are gaining traction in Congress after lying dormant for years.
Housing industry experts, congressional lawmakers and the Obama administration are increasingly optimistic an agreement can be reached that would reduce the government’s role in the mortgage finance market and fuel the housing sector’s recovery.
{mosads}“The fact that everyone is talking about it is positive from our perspective,” said Jerry Howard, president and CEO of the National Association of Home Builders.
All eyes are turning to the Senate Banking Committee, which many industry leaders argue is most likely to produce a bipartisan measure.
“The cooks are gathering in the kitchen and, at least, if they can put something together, we want to encourage this movement and put it to bed,” Howard said.
Lawmakers are seeking to reduce the role of the government in the mortgage market in the aftermath of the financial crisis, which resulted in the Federal Housing Finance Agency (FHFA) taking control of mortgage giants Fannie Mae and Freddie Mac.
As a result, the government now guarantees the vast majority of mortgages in the United States, a situation that lawmakers fear could put taxpayers on the hook in the event of a market crash.
The Senate is coalescing around a housing bill crafted by Sens. Mark Warner (D-Va.) and Bob Corker (R-Tenn.), both members of the Senate Banking panel.
Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) said they expect to put together a measure eventually that will include the best parts of the Corker-Warner bill with a mix of other ideas.
In the House, meanwhile, Financial Services Committee Chairman Jeb Hensarling (R-Texas) is moving forward with a plan of his own.
“If Senate can get a bill done, and Hensarling makes some changes and gets it through the House, Congress can give the American people a nice Christmas present,” Howard said.
David Stevens, president and CEO of the Mortgage Bankers Association, said it would be a huge step for Senate Banking to complete a bill by the end of the first quarter of next year, especially when weighing the possible budget and debt fights that could be set up in January and February.
“It needs time and attention,” he said. “I would be thrilled if it got out of committee by then.”
He said leaders of the Senate Banking panel are “clearly cognizant” of the value of the Corker-Warner bill and “we’re hopeful that they keep that coalition together” to get a bill through the upper chamber.
“I think there’s growing optimism that something could actually work in the Senate,” Stevens told The Hill.
While the House effort by Hensarling lacks bipartisan support, Stevens said House Republican leaders recognize that their bill lacks a government guarantee on a 30-year, fixed-rate mortgage — a major concern for Democrats and the housing industry.
Stevens said House leaders want to resolve the question of how big the mortgage guarantee should be in a conference committee.
“There’s actually a lot of commonality,” he said.
But Stevens said no housing reform bill would pass the House unless it provides some way to protect the 30-year mortgage, which has become a staple among U.S. homebuyers.
“We need to get this reform done in a reasonable way that protects the core infrastructure of the housing system with a government guarantee on the 30-year, fixed-rate mortgage for a portion of the market,” Stevens said.
“So getting everyone to that end is where we’re ultimately headed.”
Stevens and Howard were two of a handful of industry leaders who attended a meeting at the White House on Monday about a push in the Senate for confirmation of Rep. Mel Watt (D-N.C.) to head the FHFA.
White House officials reiterated the administration’s strong support for housing finance reform at the meeting and said the Senate should continue its work on a bipartisan plan.
Last week, Warner and Rep. Randy Neugebauer (R-Texas) suggested that the two chambers should be able to sit down and hammer out their differences on housing legislation.
Neugebauer said it’s “important to move this ball down the road.”
Edward DeMarco, the FHFA’s acting director, said Congress needs to reduce the government’s role in Fannie and Freddie without delay because the current business model is “broken.”
“This is not a sustainable long-term operating structure,” DeMarco said.