Congress Starts to Tackle Mortgage Finance Reform
Texas Insider Report: WASHINGTON, D.C. – “It’s been nearly five years since the financial crisis, which was caused in large part by Washington policies that incented, mandated and browbeat financial institutions to loan money to people to buy homes they ultimately could not afford,” said Texas Congressman & Chair of the U.S. House Financial Services Committee Jeb Hensarling last week. While efforts by Congress to address problems in the nation’s mortgage 
finance system have gained steam in Congress during recent months, and while Texas has weathered the housing crisis that has gripped the nation better than many other states, many Texans still face difficulty securing the financing needed to purchase a home.
Beginning with the 2008 Financial Crisis, policy makers enacted laws and regulations to prevent a reoccurrence. In this process, the Federal National Mortgage Association, (Fannie Mae) and the Federal Home Loan Mortgage Corporation, (Freddie Mac) have gained larger roles in the mortgage finance system. Many believe this system is unsustainable and several groups and members of Congress are calling for reforms.
Dallas-area Congressman Jeb Hensarling, chairman of the powerful House Financial Services Committee has championed reform efforts in the U.S. House of Representatives through legislation called Protecting American Taxpayers and Homeowners Act (the PATH Act).
“Housing is not immune to the economic laws of supply and demand, or risk and reward,” Cong. Hensarling told the Bipartisan Policy Center Housing Commission’s Regional Forum at the George W. Bush Presidential Center in mid-August.
“The PATH Act principally relies upon private capital and market discipline,” said Hensarling.
The PATH Act ends the nearly $200 billion bailout of Fannie Mae and Freddie Mac and gradually phases out the troubled Government-Sponsored Enterprises.
Supporters also say the bill increases competition by:
- Ending the federal government’s domination of the housing finance market
- Protecting and sustaining the 30-year Fixed-Rate Mortgage, and
- Gives consumers more choices in determining which mortgage product best suits their needs.
Groups like the National Mortgage Bankers Association (MBA) support some of elements of the Act. They believe that in order to fully restore the health of the U.S. housing market, lawmakers need to ensure that not only borrowers who can repay their obligations get loans, but that unnecessary bureaucratic obstacles to lenders are removed to free up more 
capital for qualified borrowers to access. They support a long-term, continuous flow of capital and broad access to credit but believe there should be an explicit, limited government guarantee of the loans.
“Today’s system of boom, bust and bailout is retarding economic growth and helping fuel what all acknowledge as unsustainable levels of national debt,” Chairman Hensarling said.
“It’s been three years since the Dodd-Frank Act failed to do anything about Fannie Mae and Freddie Mac and their record taxpayer-funded bailout. Now it’s time for action to create a sustainable housing finance system – sustainable for taxpayers, for homeowners and for our economy,” Hensarling said.
