Fannie Mae-No Politics (FNMA)

[10bambam]

The Fannie and Freddie Reform Logjam: A Step Toward a Grand Bargain




The prospect for reform of the government-sponsored housing finance enterprises Fannie Mae and Freddie Mac has taken a giant step backward, despite the fact that the bipartisan bill proposed by Senators Tim Johnson (D-SD) and Mike Crapo (R-Idaho) and designed to shift their role to new private entities, managed to clear the Senate Banking Committee last week. The limited support among committee Democrats means the bill is unlikely to come to a full Senate vote and has, in effect, suffered death by a thousand cuts. Non-profit home-ownership advocacy groups on the Left feared that incentives for private versions of the two government-sponsored enterprises to extend credit to so-called “underserved” groups would not be as effective as the affordable housing mandates which force Fannie and Freddie to purchase mortgages made to low-income and minority buyers. Their view likely influenced recalcitrant committee Democrats. Even had it had such support, the bill faced looming House opposition from those who argued (as have I) that affordable mandates would lead to easy credit—and a repeat of the 2008 housing foreclosure and delinquency crisis, with the poor themselves most at risk. Just to make things even more complicated, the bill also suffered because of a split on the Left, as a range of other housing non-profits, including the National Low-Income Housing Coalition, supported the bill because of its encouragement of more low-income rental housing.

These developments remind us that, as in some many parts of American life, the non-profit sector has come both to depend financially on government for revenue (affordable housing rely on affordable housing mandates, as well as tax credit financing) and to see policy advocacy as much of its raison d’tre. But they also mean, as regards housing policy, that the course of least resistance is now an unhappy one: the status quo ante. Fannie and Freddie would continue, with some level of affordable housing mandates—perhaps higher rather than lower given the recently-expressed preference of Federal Housing Finance Director Mel Watt, who oversees the mortgage giants, for less-strict mortgage underwriting guidelines


http://www.forbes.com/sites/howardhusock/2014/05/19/the-fannie-mae-and-freddie-mac-reform-logjam-one-step-toward-a-grand-bargain/