May 14, 2014

Johnson-Crapo housing finance mark-up resumes

May 15, 2014 – NAFCU will closely monitor today's Senate Banking Committee mark-up of a housing finance reform package drafted by panel Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho.

The mark-up began April 29 with opening statements by Johnson and Crapo but was put on hold to allow committee members more time to review the draft legislation and consider changes that would draw more support. In the meantime, six Democratic committee members have indicated they will now oppose the bill.

An updated manager's amendment and an additional amendment containing changes to the draft were circulated this week. These amendments, which revise an earlier package released recently, would set additional limits to vertical integration in order to prevent any one institution from exerting undue influence on the housing finance market.

These more recent changes would also seek to clarify the limits on the proposed new Federal Mortgage Insurance Corporation's regulatory authority and would require the FMIC to report back to Congress on the establishment of a small-lender mutual corporation.

NAFCU has been in contact with Senate Banking members, other members of the House and Senate, the White House, Federal Housing Finance Agency and more to ensure that small institutions have equal, competitive access to the secondary mortgage market in any future housing finance system. It has meanwhile raised concerns about costs and uncertainty surrounding the proposed reforms. It has made several recommendations with other financial trade organizations to improve the discussion draft.

On Tuesday, Federal Housing Finance Agency Director Mel Watt said his agency does not plan to change its policy of allowing debt-to-income ratios above 43 percent for some loans purchased by Fannie Mae and Freddie Mac – a position NAFCU has supported.

Watt, speaking at a Brookings Institution event, added that FHFA will not reduce the current limits on the size of loans that can be purchased by the GSEs.