MORTGAGE FINANCE AND GSE REFORM PROPOSALS

 

GENERAL OBSERVATIONS:

  • House Financial Services Committee GSE Reform hearings (2017):

  • Federal Reserve Governor Jerome Powell offered several key principles for housing finance reform in his speech to the American Enterprise Institute and suggested now may be good time to proceed.

  • Senate Banking Committee's Committee on Banking, Housing and Urban Affairs held open session on June 29, 2017 entitled "Principles of Housing Finance Reform". See links below under Selective GSE and Mortgage Finance Reform Proposals & Research for other details and on July 20, 2017 entitled "Housing Finance Reform: Maintaining Access for Small Lenders".

  • Most importantly, how do you craft mortgage finance and GSE reform and housing policy at the national level to align with local and regional institutions who must "skate to where the puck is going to be, not where it has been" (Wayne Gretzky) as conditions evolve?

  • Nationally "reform" is ongoing both reflected in private sector developments and on the regulatory front - primarily FHFA; this evolution will continue in the void of legislative actions.

  • Much of current activity impacts only the supply side of the housing and mortgage finance system - low or no down payments, higher market share of purchase mortgages by FHA; putting continued upward pressure on home prices as supply issue remains unresolved (i.e., homes affordable to first time buyers and families moving up from their starter homes).

  • Small lenders play an important role in the U.S. mortgage finance system and need assured fair access. Here are Senate Banking Committee hearings on topic held in 2013: Protecting Small Lender Access to the Secondary Market and Ensuring Access for Community Institutions. This remains an important issue reflected in various proposals including MBA.

  • What is the most effective means to supporting affordable housing via the MBS market with "duty to serve" rules for Fannie & Freddie or through programs such as Fannie & Freddie housing trust fund allocations and FHLBank Affordable Housing Programs? In 2016, these two programs made nearly $850 million available to support first time buyers and affordable housing with funds going to local level where decision can be made best. Several of the GSE proposals advocate the latter. Importantly, multiple ideas, programs and plans are needed here; no single solution can meet the vast needs.

  • Secondary markets appear to be functioning well even with Fannie & Freddie in conservatorship; there remains the need for final clarity and resolution to the ongoing debate.

  • Banking regulation - Basel capital & liquidity rules especially - have changed the focus of what can be held on a bank's balance sheet such that long-dated, 100% risk weighted assets are not desirable; with Fed announcing return to normal and reduction of their MBS and Treasury securities holdings, where will the investors in these mortgage assets (whole loans or MBS) be found?

  • There are some excellent and well thought out discussion papers - Mortgage Bankers Association, Milken Institute, Bipartisan Policy Center, Economy.com and Urban Institute, among others; Can these approaches undergo further collaboration to fine tune a collective vision?

 

RESEARCH POLICY CENTERS:

 

RECENT RESEARCH & PROPOSALS:

The following are recent proposals or research relating to GSE and mortgage finance system reform and housing studies:

  1. Fed Governor Jerome Powell: The Case for Housing Finance ReformLink to Website.    Link to PDF.

  2. Main Street GSE Reform Coalition: Common GSE Reform Principles.        Link to PDF

  3. Joint Center for Housing Studies (Harvard University): The State of the Nation's Housing 2017.     Link to Website.            Link to PDF

  4. Mortgage Bankers Association: Creating a Sustainable, More Vibrant Secondary Mortgage Market.         Link to Website.   Link to PDF

  5. New York Fed: 2017 Survey of Consumer Expectations Housing Survey.            Link to Website.      

  6. Black Rock: Addressing the Housing Finance Conundrum    Link to PDF

  7. Urban Institute / Jim Parrott (2017): Clarifying the Choices in Housing Finance Reform.            Link to Website.         

 

GSE AND MORTGAGE FINANCE REFORM RESEARCH & PROPOSALS:

The following are a selection of proposals or research relating to GSE and mortgage finance system reform:

  1. Senate Banking Committee Hearings: Part 1 (3/26/2019) and Part 2 (3/27/2019)

  2. Senate Banking Committee Hearing (7/20/2017): Housing Finance Reform: Maintaining Access for Small Lenders           

  3. Senate Banking Committee Hearing (6/29/2017):      Hearing Website   MBA_Stevens_Testimony     FSR_DeMarco_Testimony    CRL_Calhoun_Testimony

  4. Senator Shelby CBO Request (2016):       Letter to CBO         CBO Report

  5. Senator Shelby GAO Request (2016):       Letter to GAO         GAO Report

  6. Milken Institute (2016 - Bright & DeMarco):      Toward a New Secondary Mortgage Market.           

  7. Bipartisan Policy Center (2016 - Stegman):      Building on the Johnson-Crapo Consensus.

  8. Urban Institute (2016 - Parrott, Ranieri, Sperling, Zandi & Zigas):      A More Promising Road to GSE Reform.     

  9. Sonecon LLC (2015 - Shapiro & Kamarck): A Strategy to Promote Affordable Housing for All Americans By Recapitalizing Fannie Mae and Freddie Mac

  10. Congressional Budget Office (2014):      Transitioning to Alternative Structures for Housing Finance.   

  11. U.S. Treasury (2011):      Reforming America's Housing Finance Market  

 

LEGISLATIVE PROPOSALS FOR GSE AND MORTGAGE FINANCE REFORM:

The following are a selection of legislative proposals relating to GSE and mortgage finance system reform:

  1. Corker and Warner et al (2013):     The Housing Finance Reform and Taxpayer Protection Act of 2013.           

  2. Garret et al (2013):     Protecting American Taxpayers and Homeowners (PATH) Act.

  3. Delaney, Carney, Himes et al (2014):     Partnership to Strengthen Homeownership.     

  4. Waters (2014):     Housing Opportunities Move the Economy (HOME) Forward Act.