Fannie Mae-No Politics (FNMA)

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11:15 am ET
Nov 5, 2014
Now Playing in Housing Finance: Groundhog Day
ARTICLE
COMMENTS
FANNIE MAE
FREDDIE MAC
GSE
HEARD ON THE STREET
MORTGAGE MARKET
OVERHEARD
1 1
OVERHEARD
By JOHN CARNEY
Despite the change in control in the U.S. Senate, the future of housing finance will probably look a lot like the current status quo.

The Senate Banking Committee is set to be headed by Sen. Richard Shelby, the Alabama Republican with a long history of criticizing Fannie Mae FNMA +3.06% and Freddie Mac FMCC +2.74%. The ranking Democrat will be Ohio Democrat Sen. Sherrod Brown. Both voted earlier this year against legislation, the Johnson-Crapo bill, that would have scrapped Fannie and Freddie in favor of a new private-public hybrid mortgage system.

Yet this is far from a sign of deep agreement between the two. As FTN Financial’s Jim Vogel points out, the senators opposed Johnson-Crapo for opposite reasons: Sen. Brown faulted it for insufficient support for affordable housing, Sen. Shelby because it preserved too big a role for government in housing finance.

The housing industry, banks and affordable housing lobbyists likely have enough clout on Capitol Hill to block any reform that would slash government mortgage support, the goal of some House Republicans. But not enough to overcome the gridlock that has stymied earlier efforts to reform Fannie and Freddie.

A sweeping housing-finance overhaul will have to wait until 2017—at least.