Representatives John Delaney (D-MD), John Carney (D-DE), and Jim Himes (D-CT) introduced H.R. 1491, the “Partnership to Strengthen Homeownership Act,” on March 19. The bill would wind down Fannie Mae and Freddie Mac and replace them with a mortgage insurance program through Ginnie Mae. The bill would require that the first 5% loss be held by private entities.
A 10 basis point fee of the total principle balance of all insured mortgages would be charged in exchange for the insurance, creating a dedicated source of revenue for the NHTF, the CMF, and a new Market Access Fund (MAF). The NHTF will receive 75% of the funds, with 15% going to the CMF and 10% to the MAF.
Because the new program will cover Federal Housing Administration (FHA) insured mortgages as well as conventional mortgages, the volume of business going through Ginnie Mae will be greater than what has been estimated for other housing finance reform bills, including the Johnson-Crapo bill in the last Congress. Therefore the base on which the 10 basis point fee will be assessed is bigger, and has been estimated at $6 billion a year. That would provide $4.5 billion annually for the NHTF.
The bill would eliminate the affordable housing goals now required of Fannie and Freddie, but retain a duty to serve all markets. Fannie and Freddie’s current multifamily divisions would be “spun out” and operate as new entities with mortgage insurance provided by Ginnie Mae
The bill has an additional eight original co-sponsors, all Democrats. They are Representatives Denny Heck (WA), Greg Meeks (NY), Patrick Murphy (FL), Jared Polis (CO), Mike Quigley (IL), David Scott (GA), Kyrsten Simena (AZ), and Peter Welch (VT).
H.R 1491 is an updated version of a bill that Representatives Delaney, Carney, and Himes introduced in the last Congress. The bill has been referred to the House Financial Services Committee.