The House Financial Services Committee began its markup of the Protecting American Taxpayers and Homeowners Act on Tuesday.
The legislation, introduced by committee Chairman Jeb Hensarling, would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and terminate their conservatorship over five years.
Within six months of the PATH Act’s enactment, the Federal Housing Finance Agency director would be required to choose a method of valuing a common securitization infrastructure for residential mortgage-backed securities. The FHFA would transfer ownership of the proprietary CSI within one year to the National Mortgage Market Utility, which would be a newly created non-profit cooperative.
Additionally, the bill would remove the Federal Housing Administration from under the Department of Housing and Urban Development and require it to maintain its own books. The FHA would also be required to set credit requirements for borrowers and increased risk sharing from FHA lenders.
Over the past five months, the HFSC has held 12 hearings and has heard testimony from more than 50 witnesses on the shortcomings of the current housing finance system and the need to reform its structure.