Senate Banking Committee Chairman Crapo Releases Outline for Housing Finance Reform

Senate Banking, Housing and Urban Affairs Committee Chairman Mike Crapo (R-ID) released an outline for housing finance reform legislation.

In a statement Chairman Crapo said, “we must expeditiously fix our flawed housing finance system. My priorities are to establish stronger levels of taxpayer protection, preserve the 30-year fixed rate mortgage, increase competition among mortgage guarantors, and promote access to affordable housing.  I invite my Senate and House colleagues, the Administration and all interested stakeholders to work together to enact this critically needed reform.”

Sen. Crapo’s outline would:

  • Change the Federal Housing Finance Agency’s structure so that it is run by a bi-partisan board of directors instead of a single Director.
  • Fund the National Housing Trust Fund, Capital Magnet Fund, and Market Access Fund through an annual assessment of 10.0 basis points of the total annual loan volume guaranteed by each guarantor. The Market Access Fund, which would replace duty-to-serve requirements and affordable housing goals, would provide grants, loans, and credit enhancement to address the homeownership and rental housing needs in underserved and low-income communities.
  • Release Fannie Mae and Freddie Mac as private companies that would serve as guarantors for the timely repayment of principal and interest to investors of eligible mortgages that are securitized through a platform operated by Ginnie Mae along with any other companies that enter the space.
  • Utilize Ginnie Mae to guarantee timely repayment of principal and interest on securities that receive credit enhancement from guarantors that are approved and regulated by the FHFA. Technology and infrastructure being developed as part of the Common Securitization Platform may be sold or transferred to Ginnie Mae.
  • Limit the percentage (to be determined) of all outstanding guaranteed eligible mortgages that a guarantor is permitted within a to be determined timeline as well as ensuring a to be determined timeline within which all guarantors are required to be fully capitalized after the enactment of the legislation.