Tuesday, January 21, 2014 4:46:46 PM
http://blogs.marketwatch.com/capitolreport/2014/01/21/co-author-of-house-democrat-housing-reform-plan-presses-forward/
Rep. John Carney says he will be meeting with industry and White House officials as well as with lawmakers in the Senate in the coming weeks to advance a new housing-reform package that he and two other House Democrats have put forward.
“We want to introduce something by March. Things are going to happen in the Senate and House that we need to be able to react to,” the Delaware member of the House Financial Services Committee said in a phone interview with MarketWatch.
The window, Carney concedes, is “fairly narrow.” With midterms later in 2014, and housing reform not yet on the list of this year’s priorities for the House Republican leadership, the scope for an ambitious effort to replace government-seized Fannie Mae and Freddie Mac is admittedly limited.
And it won’t be easy to get any housing reform plan through Congress a time when the housing market has been on an upswing, with prices up by double-digits and sales at the best levels since the recession. Carney acknowledges this challenge but points out taxpayers are backing north of 90% of mortgages. “We saw what happened in 2007 and 2008 there,” he says.
Carney repeatedly pitches his plan as “meeting the right balance.” It would effectively replace the current mortgage system with one where private capital would backstop the first 5% of mortgage securitizations, with Ginnie Mae and more private money backing the rest. A bipartisan proposal from Sens. Bob Corker and Mark Warner would have private capital backstop the first 10% of MBS. The Protecting American Taxpayers and Homeowners of House Financial Services Chairman Jeb Hensarling would phase out Fannie Mae and Freddie Mac entirely over five years, by contrast. ”We’d like to strike a good, moderate balance between the proposals out there,” he said.
Using analysis provided by Moody’s chief economist Mark Zandi, his office estimates the cost to the average 30-year mortgage would be less than the 94 to 119 basis points under Corker-Warner and the 146 to 156 points under the PATH Act. The current system adds 52 basis points, per the Zandi analysis.
The plan also would hold out some hope for existing shareholders of Fannie Mae FNMA and Freddie Mac FMCC , since in time they would be privatized, though Carney said he hasn’t really focused on that element.
– Steve Goldstein
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