May 15, 2014
Senate Banking Committee Approves Legislation that Would Overhaul the Mortgage Finance Market
This morning, the Senate Committee on Banking, Housing and Urban Affairs convened in executive session to complete consideration of S. 1217, the Housing Finance Reform and Taxpayer Protection Act of 2013. The Committee initially began this meeting in late April, but subsequently delayed the consideration of the bill to allow Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) to try to gather more support amongst the committee’s members.
Last week, it was widely reported that Senators Charles Schumer (D-NY), Sherrod Brown (D-OH), Jeff Merkley (D-OR), Robert Menendez (D-NJ), Elizabeth Warren (D-MA) and Jack Reed (D-RI) held a private meeting and agreed to pull their support for S. 1217. Nevertheless, the Committee proceeded to vote with only 13 (seven Republicans and six Democrats) of the 22 Members of the Committee voting in favor of the measure, as amended by two “Manager’s Amendments,” which are available here and here. The vote was weaker than its sponsors had hoped for and is not likely sufficient to provide momentum to move the bill to the Senate floor.
In a statement issued after the Committee vote, Chairman Johnson cited the following as the key parts of the legislation:
"The legislation winds down and eliminates Fannie Mae and Freddie Mac and allows for a diverse set of private entities to step in and replace most of the functions of the government sponsored enterprises. The new system will be regulated by the modernized and streamlined Federal Mortgage Insurance Corporation (FMIC), modeled in part after the FDIC. It also creates a reinsurance fund, known as the Mortgage Insurance Fund, to protect taxpayers.
"The new system establishes a type of mortgage-backed security with an explicit government backstop and 10% first loss private secondary-market capital to absorb losses and protect taxpayers from future bailouts."
NAREIT will continue to participate in the national housing policy dialogue.
If you have any comments or questions, please contact NAREIT's Senior Vice President of Policy and Regulatory Affairs, Victoria Rostow, at email@example.com.