May 09, 2014

Report: 6 key Democrats won't OK housing finance measure

May 9, 2014 – Bloomberg reported that six key Senate Democrats met privately Thursday and decided against supporting a proposed housing finance reform package unless major changes are made. One senator is quoted noting concerns raised by credit unions and others about the package.

According to the report, Charles Schumer of New York, Sherrod Brown of Ohio, Jeff Merkley of Oregon, Robert Menendez of New Jersey, Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island have "agreed that the structure of the re-insurer seemed unworkable and the bill lacked sufficient support for affordable housing goals."

"I think there is increasing sentiment I hear from people from all over the financial services sector, from Wall Street to community banks to credit unions, that say, ‘How is this going to work?'" Brown is quoted saying. Sen. Bob Corker, R-Tenn., is also quoted expressing doubt about chances for Senate passage if support is not broad enough.

The latest version of the reform package, released in March by Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, calls for a wind-down of Fannie Mae and Freddie Mac and creation of a new mortgage insurance entity, the Federal Mortgage Insurance Corp.

Under the proposal, FMIC would be authorized to create one or more mutual companies to facilitate secondary mortgage market access for lenders, including small lenders like credit unions. The package also sets up a series of new fees and a plan for transferring Fannie and Freddie funds to help capitalize the new entity.

The committee opened a mark-up of the measure last week but paused to give members more time to review the bill. In a separate report yesterday, Sen. Jon Tester, D-Mont., was quoted suggesting mark-up could resume next Thursday but noting doubts for progress if that doesn't happen.

NAFCU has been in constant 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.