Private mortgage bill headed to full committee
A bill calling for different sets of underwriting standards to provide private investors in mortgage-backed securities a choice of risk level was cleared Thursday by the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises on a vote of 18-15.
The bill, titled the Private Mortgage Market Investment Act, was authored by subcommittee Chairman Scott Garrett, R-N.J. NAFCU, writing the panel in advance of yesterday's mark-up, said it would not support the measure as drafted because it offers no explicit guarantee as to the payment of principal and interest on mortgage-backed securities, a provision the association sees as crucial to ensuring credit unions access to a reliable flow of liquidity for mortgage loans.
The panel acted on several amendments presented during mark-up and rejected each, mostly along party lines. An exception was an amendment proposed by Rep. Stephen Lynch, D-Mass., to delay the bill's effective date until after the government-sponsored enterprises (Fannie Mae and Freddie Mac) are no longer in conservatorship or receivership. The amendment failed on a vote of 15-18, with Rep. John Campbell of California offering the only Republican vote in favor of it.
Other key amendments attempted, and rejected, would have:
- removed language in the bill that would repeal the credit retention risk requirement under the Dodd-Frank Act;and
- created exceptions to the bill's prohibition against regulatory orders for principal reductions on securitized mortgages.
The bill goes next to the House Financial Services Committee.
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