House Republicans introduced a measure on Thursday that would liquidate government mortgage giants Fannie Mae and Freddie Mac and reduce the role of government in the housing finance system.
Introduced by Rep. Jeb Hensarling (R-Texas), the chairman of the House Financial Services Committee, the plan would also reform the Federal Housing Finance Administration and create a new non-profit National Mortgage Market Utility that would be under the jurisdiction of the FHFA, The Hill reports.
Rep. Maxine Waters (D-Calif.), the ranking member of the HFSC, said the plan was “little more than an attempt” to revamp the American housing finance system “using the same kind of right-wing ideology that has eroded America’s middle class for decades.”
“This bill eliminates the 30-year fixed rate mortgage as we know it and consigns future generations of homeowners to the types of high interest, balloon-payment mortgages that caused the financial crisis,” Waters said, according to The Hill. ”This is by no means a bipartisan bill. By presenting such an extreme proposal — with no input from Democrats — the chairman stands in stark contrast with his colleagues in the Senate and has made it clear that bipartisan housing finance reform is not his priority.”
While the proposal has not gained popularity with Democrats, who have said the measure threatens the housing recovery, several industry groups, including the Securities Industry and Financial Markets Association and Independent Community Bankers of America, have expressed support for the plan.
“Continued community bank access to a financially strong, reliable and impartial secondary mortgage market is essential to preserving access to mortgage credit in all areas of the country and supporting the housing recovery. All lenders should have equitable access to the secondary market to ensure the continued flow of mortgage credit to consumers nationwide.
“This legislation advances an important discussion that is critical to the economic health and well-being of Main Street communities,” the ICBA said. “Given community banks’ direct and fundamental ties to their communities, it’s essential that the community banking industry continue to be closely involved in the process of secondary-market reform. We look forward to continuing to work with Congress on this issue as the debate continues.”