Sen. Bob Corker (R-Tenn.) called on a panel of witnesses before a Senate hearing on housing finance reform last week to testify on whether legislation he drafted with nine other lawmakers would be an effective starting point for reform.
In June, Corker and Sen. Mark Warner (D-Va.), along with eight other lawmakers, introduced the Housing Finance Reform and Taxpayer Protection Act, which is aimed at replacing Fannie Mae and Freddie Mac with a privately capitalized housing finance reform system that seeks to protect taxpayers from future bailouts and to preserve market liquidity.
Under the proposal, Fannie and Freddie would be gradually wound down by 15 percent per year and would be replaced by the Federal Mortgage Insurance Corp., which would provide a government backstop for investors. The newly created FMIC would play a role similar to the FDIC and would be capitalized with fees assessed to issuers of mortgage securities, Timesfreepress.com reports.
Mark Zandi, the chief economist for Moody’s Analytics, said the legislation would be “an excellent starting point” for reform, adding that the legislation “shows a lot of hard work and a lot of good ideas and thoughts.”
SunTrust Mortgage CEO Jerome Lienhard said the legislation highlights many issues related to housing finance reform, calling the legislation “a very good start.”
Other co-sponsors of the legislation include Sens. Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.), Kay Hagan (D-N.C.), Mark Kirk (R-Ill.), Joe Manchin (D-W.V.) and Saxby Chambliss (R-Ga.).