Representative Mick Mulvaney (R-SC) introduced the “Housing Finance Restructuring Act of 2016” (H.R. 4913) on April 12 to recapitalize Fannie Mae and Freddie Mac and release them from conservatorship. The bill would suspend Fannie Mae and Freddie Mac’s obligation to set aside funds for the National Housing Trust Fund (NHTF) and Capital Magnet Fund (CMF) until the government sponsored enterprises (GSEs) reached a certain level of capitalization.
Under the bill, the outstanding debt the GSEs owe to the U.S. Treasury would be considered repaid and the GSEs would be allowed to rebuild their capital reserves, ending the Treasury sweep of the GSEs’ profits. The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), would be tasked with coming up with a capital restoration plan for each company. Once the GSEs attain capital reserves that are 5% of the risk-weighted assets of the companies, FHFA’s conservatorship of the GSEs would end.
Fannie and Freddie would be prohibited from contributing to the NHTF and CMF until each company’s capital reserves reach 10% of the risk-weighted assets of the company. While Mr. Mulvaney estimates that the GSEs will reach this capital level in two years, others estimate that it could take as long as five to ten years.
NLIHC opposes and will work to defeat this bill should it be brought up for consideration. The bill has no co-sponsors. It has been referred to House Financial Services Committee.
Read the bill here: https://www.congress.gov/bill/114th-congress/house-bill/4913
For more information and to join the United for Homes campaign, go to: http://nlihc.org/unitedforhomes