House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises (GSEs) Chairman Scott Garrett (R-NJ) circulated a draft bill that would make a series of reforms to change and standardize the way the secondary mortgage market is regulated.
He held a hearing on his discussion draft of the Private Mortgage Market Insurance Act on November 3. The bill is silent on the National Housing Trust Fund (NHTF) and the NHTF did not come up at the hearing.
The bill marks the latest proposal by Committee on Financial Services Republicans to reform the housing finance system. NHTF advocates were concerned that Mr. Garrett’s bill could incorporate H.R. 2441, the bill introduced by Representative Ed Royce (R-CA) to abolish the National Housing Trust Fund (NHTF) (see Memo, 7/15).
Earlier this year, the Capital Markets Subcommittee marked up 14 bills aimed at dismantling the housing GSEs, Fannie Mae and Freddie Mac, including H.R. 2441. The bill was approved by the subcommittee on July 12, but no further action has been taken on H.R. 2441 or any of the other subcommittee-approved measures aimed at reforming the mortgage finance system.
NLIHC will continue to monitor the Private Mortgage Market Insurance Act as it is formally introduced and as it moves through committee.
One of the witnesses, Janneke Ratcliffe of the Center for American Progress, expressed concern about how the rental market would fare if the GSEs are dismantled and no successor entity is put into place. She said, “the bill mentions nothing about the multifamily mortgage market. It is projected that the shortage in affordable rental housing is only going to be exacerbated in the wake of the foreclosure crisis. Over the next 30 years, we may need to add more than 40 million new housing units of all types to meet the demand. We cannot get on track without a strong rental housing finance system. If this bill were to be enacted, how would the multifamily market continue to operate, particularly if the GSEs are wound down?” The hearing left unanswered how these concerns would be addressed under the bill.
Although Mr. Garrett expressed a desire to move the bill quickly and in a bipartisan manner, it is unclear when the Private Mortgage Market Insurance Act will be formally introduced. When Committee on Financial Services Ranking Member Barney Frank (D-MA) asked if a markup on the bill would be held on November 15 as was rumored, Garrett could not confirm that a markup has been officially scheduled.
The bill language is available at: http://nlihc.org/doc/Private_Mortgage_Market_Investment_Act_2011.pdf
A section-by-section summary is available at: http://nlihc.org/doc/Private_Mortgage_Market_Investment_Act_2011_Summary.pdf
An archived hearing webcast and all witness testimony are available at: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=266666