House Financial Services Republicans Present Housing Finance Proposal, NHTF Would be Eliminated

House Committee on Financial Services Chair Jeb Hensarling (R-TX) unveiled a package to dismantle the current housing finance system, the “Protecting American Taxpayers and Homeowners (PATH) Act,” on July 11. As of this writing, the bill has not been formally introduced although the text of a discussion draft of the legislation has been made available.The PATH Act calls for a five-year phase out of the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. As part of this wind-down, the bill would repeal the authorization of the current GSE affordable housing goals as well as the National Housing Trust Fund (NHTF). The bill would also make changes to the Federal Housing Administration (FHA), including making FHA a separate agency, no longer part of HUD. The bill would limit FHA’s activities to first-time homebuyers with any income, and low and moderate-income borrowers. It would lower the FHA conforming loan limit for high-cost areas from $729,750 to $625,500, and establish a nationwide floor of $200,000 for non-high-cost areas. The bill would “establish a new non-government, not-for-profit National Mortgage Market Utility (Utility) regulated by the Federal Housing Finance Administration (FHFA) to develop common “best practices” standards for the private origination, servicing, pooling, and securitizing of mortgages, and operate a publicly accessible securitization outlet to match loan originators with investors.” The Utility would not be allowed to originate, service, or guarantee any mortgage or mortgage backed security.House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises Chair Scott Garrett (R-NJ) said in a press release, “Approximately five years ago our nation was hit with an unprecedented financial crisis. I am pleased that we are continuing the process of addressing the core cause of it -- the government's misguided efforts at allocating mortgage credit through Fannie Mae and Freddie Mac. I compliment Chairman Hensarling on his terrific work on this legislation and his diligent efforts in reaching out to Members of Congress and industry stakeholders to incorporate many of the ideas and suggestions that others had to offer.”The Committee on Financial Services will hold a hearing on the PATH Act on July 18 at 1 pm in room 2128 of the Rayburn House office building. Mr. Hensarling has indicated that he intends to markup the measure before the House of Representatives breaks for its August recess. NLIHC understands Democrats on the House Committee on Financial Services will soon release a set of GSE principles that, among other provisions, will allow for continued support for the NHTF in a future housing finance system. The Senate continues to advance GSE reform through the Corker-Warner bill, which includes a version of the National Housing Trust Fund (see Memo, 6/28). Senate Committee on Banking, Housing and Urban Affairs Chair Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) announced plans for an FHA reform bill on July 11. After advancing the FHA bill, the Chair and Ranking Member have indicated plans to pursue GSE reform legislation, separate from, but that may include, pieces of the Corker-Warner bill. Read an executive summary of the PATH Act at: http://bit.ly/14OkduG The text of the PATH Act is available at: http://1.usa.gov/139LROx