The Senate Committee on Banking, Housing and Urban Affairs, chaired by Senator Tim Johnson (D-SD), held a March 29 hearing, “Public Proposals for the Future of Housing Finance.” Developing the new housing finance system will be hard work and will require consensus-building and civil debate, according to Chairman Johnson, which include hearing the witnesses’ perspectives.
Three witnesses specifically considered affordable rental housing issues within their testimony.
In his written testimony, Michael Berman of the Mortgage Bankers Association said “the mission of any federally related mortgage securitization and guarantee program should be explicitly limited to ensuring liquidity in the core mortgage market through the issuance and guarantee of [mortgage backed securities]. This important mission should not be distorted by additional public or social housing policy goals. To the degree additional objectives and housing policies are desired, they should be pursued through FHA, VA, USDA, Ginnie Mae and direct federal tax and spending programs, which should be adequately funded and supported to meet these important objectives. Potentially, a surcharge could be placed on the insurance premiums to accumulate an affordable housing fund. This surcharge should be tracked separately to ensure that the insurance fund is actuarially sound.”
Dr. Arnold Kling of the Mercatus Center Financial Markets Working Group at George Mason University testified that vouchers would be an appropriate way for the government to support the rental market. “Does the government need to support the rental market? Then provide more generous housing vouchers to renters, rather than handing out subsidies that encourage indebtedness among landlords. Landlords, too, should have significant equity in their properties. Otherwise, at the first sign of trouble they will stop maintaining their buildings, allowing them to fall into disrepair and adversely impacting their tenants.”
Janneke Ratcliffe of the Center for American Progress emphasized her organization’s support for a market access fund, which “would be funded by an assessment on all [mortgage backed security] issues. A portion of the assessment would go to the National Housing Trust Fund (for direct subsidy) and to the Capital Magnet Fund (for credit programs by Community Development Finance Institutions), as established under the terms of the Housing and Economic Recovery Act of 2008. It is important that the assessment be levied on both those issues guaranteed by [chartered mortgage institutions (CMIs)] and those without CMI guarantees to ensure that the responsibility to support better service to underserved markets primarily through private finance is supported by the jumbo market as well as the middle market.”
Also the week of March 28, eight Republican members of the House Committee on Financial Services introduced eight different bills covering various aspects of housing finance reform. Reports are that they have decided to take this piecemeal approach, recognizing that the difficulty of passing a comprehensive bill. One of the bills, H.R. 1226, introduced by Representative Ed Royce (D-CA), would repeal Fannie Mae and Freddie Mac’s affordable housing goals. None of the bills would affect the National Housing Trust Fund.