Brown with NAHREP President Jason Madiedo
NAR President Steve Brown met at the White House with the federal government’s top housing officer, HUD Secretary Shaun Donovan, and the head of the National Economic Council, Jeffrey Zients, on the reform of the secondary mortgage market yesterday. The effort to replace Fannie Mae and Freddie Mac is gaining steam with the release last week of a plan by the bi-partisan leadership of the Senate Banking Committee.
Sens. Tim Johnson, D-S.D., the committee chair, and Mike Crapo, R-Idaho, the ranking member, released a plan to phase out Fannie Mae and Freddie Mac over time and replace them with a new entity called the National Mortgage Insurance Corporation that would provide explicit federal backing of loans that meet standards of safety and soundness.
NAR is looking carefully at the plan, which incorporated many principles that the association is calling for. Top among them is the explicit federal backing, but the plan also ensures the continuation of the 30-year, fixed-rate mortgage and also paves the way for the return of a robust private market for mortgage-backed securities over time.
Although details are still to be worked out, NAR wants to be sure any mortgage market reform maintains the availability of safe and affordable loans.
Sen. Tim Johnson, D-S.D.
Sen. Mike Crapo, R-Idaho
After the White House meeting, which also included leaders of the National Association of Hispanic Real Estate Professionals, National Association of Home Builders, Mortgage Bankers Association, and Independent Community Bankers of America, Brown gave an interview with Housing Wire in which he stated that the housing sector will benefit from mortgage market reform if the reform is done carefully, because the market needs the stability that good reform will provide. “By settling this issue, it will bring stability to this market, which is critical,” Brown said in the interview. “The Great Recession shows that there are imperfections [to the current structure].”
One aspect to reform that REALTORS® can take pride in is the bipartisan nature of housing issues on Capitol Hill. Just as both sides of Congress came together earlier this month to pass curbs on escalating flood insurance premiums, members of both parties want reform to succeed so housing can thrive. “It affects every American,” he said. “Whether you are a Republican or a Democrat, people’s financial investments will be protected and maintained.”
With the Senate plan now out, lawmakers in that chamber could start consideration of legislation fairly soon, analysts say.
Summary of Senate reform plan.
More on NAR’s mortgage market reform principles.
Video: Why a federal guarantee is so important.