WASHINGTON—The Housing Finance Reform and Taxpayer Protection Act, S. 1217, is drawing broad support from stakeholders and industry experts.
The legislation, sponsored by Senators Bob Corker, R-Tenn., Mark Warner, D-Va., Mike Johanns, R-Neb., Jon Tester, D-Mont., Dean Heller, R-Nev., Heidi Heitkamp, D-N.D., Jerry Moran, R-Kan., Kay Hagan, D-N.C., Mark Kirk, R-Ill., Joe Manchin, D-W.V. and Saxby Chambliss, R-Ga., would strengthen America’s housing finance system by replacing government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac with a privately capitalized system that preserves market liquidity and protects taxpayers from future economic downturns.
- “I’m a pragmatist. There’s a role in this world for purists, but they don’t serve us very well in Washington because then nothing ever gets done….. The key is to have any guarantee be explicit and the government be reimbursed at a fee which is sufficiently large that it leaves plenty of room for a robust private market. Although I haven’t studied the details, I’m much more of a supporter of the bipartisan [Senate] legislation. [S. 1217 would replace Fannie and Freddie with federal reinsurance for mortgage-backed securities.] I think we are going to have some form of guarantee whether I think we need it or not. That’s our history. That’s our system.” – Hank Paulson, former Treasury Secretary
- “We’re not designing a system from scratch. In that sense, something similar to the Corker/Warner idea should be the pig iron from which we create the new housing finance plowshare. It would be easier to smoothly transition from Fannie and Freddie to a single insurance entity for mortgages (like the FDIC for bank deposits). It keeps a lot of elements of the current system—such as widespread access to the 30-year, fixed-rate mortgage—and it likely has some protections built in for rainy days, including keeping credit flowing even when fully private credit might dry up….. The consensus around an idea like that proposed by Corker and Warner seems to be growing. If that’s the case, it’s time to get something done.” - Stan Humphries, chief economist at Zillow, an online real estate company
- “What is needed is a ‘hard wired’ counter-cyclical mechanism. The Senate Corker-Warner housing reform bill could be a good start in that direction. The proposed purely governmental Federal Mortgage Insurance Co., if structured properly, could play a countercyclical role.” - James B. Lockhart, former director of the FHFA and its predecessor, the Office of Federal Housing Enterprise Oversight, now the vice chairman of WL Ross & Co. LLC, a private equity firm
- “While not perfect, the Corker-Warner bill in Congress brilliantly calls for government-guaranteed MBS with risk sharing on the loans. This allows the MBS to trade at very low yields, ensuring a low mortgage rate for the homeowner. It also allows the government to lay off the first-loss credit risk. Who should like this? Homeowners, mortgage investors, politicians who want the middle class to have access to reasonable mortgages and politicians who don't want the government on the hook for massive losses. This concept should garner strong bipartisan support and is a solid basis for honest reform talk.” - Scott Simon, former head of mortgage-backed securities at Pacific Investment Management Company
- “The Corker-Warner bill is a serious contribution to the debate on reforming the housing finance market. We hope Congress will seriously evaluate and debate the proposal with the goal of producing final legislation that can create a strong system for the future.” – John H. Dalton, president of the Housing Policy Council at the Financial Services Roundtable
- “This legislation is a very serious effort to fix our broken mortgage finance system. If it becomes law, it will significantly reduce government’s role in housing and ensure that a broad number of American households will have access to safe 30-year fixed rate mortgages.” – Mark Zandi, chief economist at Moody’s Analytics
- “This proposal has the key elements of GSE reform, notably the substantial private capital to protect taxpayers, prevent future bailouts, and give powerful incentives for prudent mortgage origination.” – Phillip Swagel, senior fellow at the Milken Institute
- “We commend Senators Corker and Warner for introducing this important bipartisan legislation. We are grateful for their hard work and thoughtfulness, and hope the introduction of their legislation signals a renewed focus in Congress to repair our nation’s broken system of housing finance. The stakes are high. As we approach the fifth anniversary of the government’s takeover of Fannie Mae and Freddie Mac, the government dominates the housing market in a way never seen before in our nation’s history. Today, the government touches more than 90 percent of mortgages. This government-dominated status quo is undesirable and unsustainable and exposes taxpayers to unnecessary risk. Recent developments such as rising home prices and the return to profitability by Fannie Mae and Freddie Mac should not lull us into a false sense of complacency. We are pleased that the Corker-Warner legislation incorporates many of the elements of the housing finance reform plan proposed earlier this year by the Bipartisan Policy Center’s Housing Commission. The BPC plan is the product of 16 months of collaboration among 21 citizens drawn from diverse political and professional backgrounds. Like our plan, a key objective of the legislation is to create a new system that encourages private capital to play a far greater role in bearing mortgage-credit risk. Like our plan, the legislation envisions a new system in which private entities are responsible for most of the mortgage system’s functions--not only as mortgage originators and servicers but also as issuers of mortgage-backed securities and credit enhancers. To ensure a smooth transition, the legislation also reflects the BPC approach of gradually winding down Fannie Mae and Freddie Mac over a multiyear period while a new system is adopted.” – former Senate Majority Leader George Mitchell, former Senator and HUD Secretary Mel Martinez, former HUD Secretary Henry Cisneros, and former Senator Christopher “Kit” Bond, co-chairs of the Bipartisan Policy Center’s (BPC) Housing Commission
- “FHFA welcomes the introduction of the Housing Finance Reform and Taxpayer Protection Act of 2013 that will help frame the policy debate on the future of the country’s housing finance system. Fannie Mae and Freddie Mac have been in conservatorship for almost five years and Congressional action is needed to resolve this situation and expand private sector participation in the U.S. housing finance market….We look forward to working with members of both the Senate and House as the legislative process moves forward.” – FHFA Statement on Introduction of Senate Bill to Reform Housing Finance
- “The introduction of this bipartisan bill represents an important step in redefining the government role in housing finance and is a positive framework on which to begin this crucial debate. Senators Warner and Corker are to be commended for taking a thoughtful and comprehensive approach to drafting a bill to restructure the secondary mortgage market in a way that provides sufficient liquidity to the market so that lenders can offer a full range of sustainable mortgage credit to qualified borrowers through all market conditions. We realize that this bill is a starting point for the debate, and we are eager to work with the leadership of the Senate Banking Committee, the authors, and other committee members to improve the bill in a way that creates a vibrant secondary market capable that works for lenders of all sizes and business models so they can support both the owner-occupied and the multifamily rental housing markets.” – David H. Stevens, president and CEO of the Mortgage Bankers Association
- “Fannie Mae and Freddie Mac have been in conservatorship for almost five years now, and it is important that policymakers begin defining a long term plan for the future role of the federal government in the mortgage market. The Corker-Warner bill is a significant milestone and should get policymakers headed in that direction. We are pleased to see a number of synergies between this bill and MBA members thinking on the future secondary market, and we believe the Corker-Warner approach is consistent with the broad objectives of the secondary market transition concepts that MBA has recently announced.” – Debra W. Still, CMB, chairman of the Mortgage Bankers Association
- The American Bankers Association commends Senators Corker, Warner, Tester, Johanns, Hagan, Heitkamp, Heller and Moran on the introduction of the Housing Finance Reform and Taxpayer Protection Act of 2013 to address the federal government’s role in the mortgage market and resolve the longstanding conservatorship of Fannie Mae and Freddie Mac. This bi-partisan legislation is a positive first step in what is certain to be a long process toward creating a sustainable, rational and limited role for the federal government in supporting and regulating a mortgage market that is appropriately and predominately filled by the private sector. The bill follows principles long advocated by the ABA, and builds upon the framework detailed by the Bi-Partisan Policy Center’s Housing Commission on which I served. The mortgage market is a complex and intricate part of our nation’s economy and addressing the many concerns and interests of a wide range of participants will require much negotiation, compromise and cooperation. There is much work yet to be done, but this bill is a strong foundation on which to begin the process.” – Frank Keating, president and CEO American Bankers Association
- “On behalf of 1 million members of the National Association of REALTORS®, I would like to thank Senators Corker, Warner, Johanns, Tester, Heller, Heitkamp, Hagan and Moran for taking the first step to begin a substantive discussion of housing finance reform. We believe that the framework outlined in the ‘Housing Finance Reform and Taxpayer Protection Act’ contains the necessary building blocks for establishing a new housing finance system for today and tomorrow. REALTORS® primary concerns remain that affordable, long-term financing is available to consumers regardless of economic conditions. This comprehensive reform legislation would ensure a form of guarantee, provided by the federal government, that will enable the market to continue to provide long-term, fixed rate mortgage products that most consumers seek and trust. Though there are issues that remain to be addressed, this bipartisan legislation will accelerate the conversation necessary to reform our housing finance system.” – Gary Thomas, president of the National Association of REALTORS®
- “This bi-partisan legislation is an important first step to creating a secondary mortgage market that focuses on ensuring access to all financial institutions in need a functioning mortgage market, including credit unions. We are thankful to all of the senators who have put forward this bill – Sens. Corker, Warner, Tester, Johanns, Hagan, Heitkamp, Heller and Moran – for listening carefully to us and fully considering our concerns. We recognize that the legislative process of housing finance reform will be a considerable effort, particularly given the size and scope of the varying interests and concerns of the housing market’s many participants. Credit unions are ready to work with lawmakers to enact changes that will ensure that the nearly 97 million credit union members continue to have fair and affordable access to a vibrant housing market.” – Bill Cheney, President and CEO, Credit Union National Association
- “ICBA commends the bipartisan efforts of Sens. Warner, Corker, Tester, Johanns, Heitkamp, Heller, Hagan and Moran for introducing legislation to reform the housing government-sponsored enterprises… ICBA appreciates and is encouraged by the inclusion of certain provisions in the bill that would help provide access for community banks to the secondary market without requiring them to take on the additional risk and cost of securitizing loans… ICBA and the nation’s community banks look forward to continuing to work with Congress on this issue as the debate continues.” – Independent Community Bankers of America® (ICBA)
- “We applaud Senators Bob Corker and Mark Warner, along with Sens. Tester, Johanns, Heitkamp and Heller, for their leadership in crafting comprehensive legislation that would overhaul the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, and the U.S. housing finance system. This legislation is an important step in the debate on GSE reform that we believe should begin in earnest. We look forward to participating in the discussions to reform the mortgage finance system as the bill moves forward.” – Rick Judson, chairman of the National Association of Home Builders and a home builder from Charlotte, N.C.
- “ASF is strongly supportive of the bipartisan introduction of this legislation, and welcomes the tangible, constructive dialogue concerning the future of housing finance reform in the U.S. For the five years since the onset of the GSE’s conservatorship, the mortgage reform dialogue has been far too theoretical. While ASF and others all along the political spectrum will likely offer amendments to this or any other GSE reform proposal, this bill represents a strong, concrete first step towards comprehensively restructuring the currently misguided U.S. housing finance system that relies on the U.S. government to backstop over 90% of mortgages made in this country. No other country in the world, small or large, has ever put their taxpayers in such an extreme position.” – Tom Deutsch, executive director of the American Securitization Forum (ASF)
- “The Mortgage Insurance Companies of America congratulates Senators Corker and Warner and their colleagues for introducing the Housing Finance Reform and Taxpayer Protection Act today. We appreciate the bill’s recognition of the importance of returning private capital to the secondary mortgage market as well as the critical role the private mortgage insurance industry continues to play in protecting taxpayers on low down payment mortgages. The mortgage insurance industry looks forward to working with Congress to help develop a secondary mortgage market that serves first time and low down payment borrowers and protects US taxpayers from unnecessary risk.” – Teresa Bryce Bazemore, President, Mortgage Insurance Companies of America
- “The National Rural Housing Coalition writes in strong support of your efforts to ensure that rural communities will benefit from the Market Access Fund included in the Housing Finance Reform & Taxpayer Protection Act…. This legislation represents an important step forward in supporting the development and preservation of affordable housing in rural America by generating critical investments in our communities.” – Robert A. Rapoza, Executive Secretary, National Rural Housing Coalition