Subcommittee Ranking Member Maxine Waters (D-CA) said that the country needs a housing market that ensures access to affordable homeownership, access to 30-year fixed rate mortgages, and a secondary market for multifamily loans and affordable rental housing. Representative Jim Himes (D-CT) agreed, saying that “multifamily lending is so important.”
Full Committee Ranking Member Barney Frank (D-MA) expressed his hope for any new housing finance system to have a “revenue stream for affordable rental housing.”
Mark Calabria, director of financial regulation studies at the Cato Institute, testified that Fannie Mae and Freddie Mac should be put into receivership, not the current conservatorship they have been in since 2008. If the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, were instead the receiver, it would be authorized to impose losses on the GSEs’ debt holders, rather than on the taxpayer. Mr. Calabria also recommends gradually lowering the GSEs’ loan limit to at least $500,000 from the current $729,000 in an effort to transition to a “more private-sector driven mortgage system.” Mr. Calabria recommended immediately restricting loans that Fannie Mae and Freddie Mac could purchase to protect the GSEs from losses to ones that met certain standards: no mortgages for investments or second homes or for those that have a credit quality indicating a projected delinquency rate of 5% or higher; and a minimum cash investment of 10% of the value or purchase price.
Sarah Rosen Wartell, executive vice president of the Center for American Progress Action Fund, testified in support of a new housing finance system focused on liquidity, stability, transparency and standardization, and access to reasonably priced financing for both homeownership and rental housing. Ms. Wartell also argued for a system that supports the long-term best interests of all borrowers and consumers and protects against predatory practices.
Hearings on the future of housing finance will continue the week of February 14, when the House Financial Services Subcommittee on Oversight and Investigations holds a February 15 hearing on the post-conservatorship legal expenses of Fannie Mae and Freddie Mac, and on February 16, when the Subcommittee on Insurance, Housing, & Community Opportunity holds a hearing on government barriers to the housing market recovery. Witnesses for these hearings have not been announced.