U.S. Representative Scott Garrett (R-NJ) recently introduced the Protecting American Taxpayers and Homeowners (PATH) Act (HR 2767), a measure aimed at creating a more sustainable housing finance system. According to an executive summary of the PATH Act, the measure would:

  • End the Federal Housing Finance Agency’s (FHFA) conservatorship of Fannie Mae and Freddie Mac, including repealing Fannie’s and Freddie’s affordable housing goals, eliminating the Housing Trust Fund and phasing out the Government-Sponsored Enterprises (GSEs) within five years
  • Reform the Federal Housing Administration’s (FHA) scope within the housing finance system including spinning off FHA from HUD, requiring the agency to be fully self-sufficient operationally, limiting the agency’s mortgage insurance coverage from 100 percent to 50 percent, and reducing the maximum insurable loan limit
  • Establish a new non-governmental, not-for-profit National Mortgage Market Utility regulated by the FHFA, which would develop best practices for mortgage servicing, pooling and securitization but would be explicitly prohibited from originating, servicing or guaranteeing any mortgages or mortgage-backed security.  Private firms would have the option of issuing securities through a single platform with uniform rules and contracts.  This means that the federal government would monitor the secondary mortgage market but offer no guarantee on securities.

HR 2767 has four other co-sponsors, Representatives Shelley Moore Capito (R-WV), Jeb Hensarling (R-TX), Patrick T. McHenry (R-NC), and
Randy Neugebauer (R-TX).

UPDATE: The House Committee on Financial Services approved the measure by a vote of 30-27 on July 24, 2013 and is now awaiting floor action by the House.

Click here to read a press release from the Housing Finance Services Committee
Click here to read an executive summary of the PATH Act.