Federal, Housing Market, Regulation

Witnesses testify before Senate Banking Committee on housing finance reform

170px-Seal_of_the_United_States_Senate.svgThe Senate Banking Committee heard testimony from six witnesses on Tuesday during its hearing on housing finance reform.

Eric Stein, the senior vice president of the Center for Responsible Lending, said lawmakers could pursue one of two policy options: examine ways to structure a reformed finance system and the impact of the structures and a recommendation that underwriting criteria not be the hinge upon which the bill is based, Mortgage News Daily reports.

Rohit Gupta, the president of Genworth Financial’s U.S. Mortgage Insurance said the size of the down payment is irrelevant when looking at loan performance, adding that there is, however, a responsible way to offer combined loan-to-value loans by ensuring proper underwriting standards.

Larry Platt, an attorney at K&L Gates, said the Housing Reform and Taxpayer Protection Act, addresses mortgage servicing by creating the Federal Mortgage Insurance Company, which would set servicing standards for residential mortgage loans, and by creating a securitization agreement with uniform servicing standards, according to Mortgage News Daily.

Alys Cohen, the staff attorney at the National Consumer Law Center, said, however, that housing finance reforms should include improvements to existing rules, adding that the CFPB has issued a number of requirements for servicers but has not mandated loan modifications consistent with investor interests.

Additionally, Lautaro Diaz, the vice president of housing and community development at the National Council of La Raza, noted that minorities were not served well in the time leading up to the financial crisis and that they were steered towards subprime affiliates or they were not courted at all, Mortgage News Daily reports.

“As we’ve learned in recent hearings, current reform proposals do not fully address important topics, such as multifamily, PLS, and as we will explore today, making sure a new system will function better for consumers purchasing homes,” Senate Banking Committee Chairman Tim Johnson (D-S.D.) said. “Any bill moving forward must seriously consider these issues.”

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