Senators: Stay Tuned for Housing Finance Reform

WASHINGTON, D.C.–Housing finance reform remains stalled in Congress, but next year could prove pivotal in the effort to reform Fannie Mae and Freddie Mac, two senators said this week. 

“Housing finance kind of dropped off the radar for a bit, but it’s critical to our economy and the inability of Congress to reform it is concerning to me,” Sen. Jon Tester, D-Mont., said at the Mortgage Bankers Association’s National Advocacy Conference. “It’s not good for the economy or for predictability.”

Sen. Bob Corker, R-Tenn., agreed, noting that big proposals such as this one always come to a halt during presidential election years. “But I really do believe that the beginning of next year is going to be a big year for housing finance reform,” he said.

Corker said the Corker-Warner government-sponsored enterprise reform bill that he co-wrote with Sen. Mark Warner, D-Va., passed the Senate Banking Committee by a 13-9 vote in 2014. “We knew it would not make it to the floor [for a full Senate vote], but it became a blueprint toward housing finance reform,” he said. “As you know since then the portfolios of the two entities have been reduced and credit risk has been played off. Many standards laid out in that bill are being taken by the Federal Housing Finance Agency now.”

“There is a need for GSE reform,” Rep. Terri Sewell, D-Ala., told the conference. She represents Alabama’s 7th Congressional District and serves on the House Financial Services Committee. “But we’re not going to get to reform Fannie Mae and Freddie Mac if we don’t work together in the center to find common ground. There are plenty of issues we can find common ground on.”

Corker noted recent GSE reform proposals by outside groups. “Mark Zandi and others put together a proposal that offers a little bit of a center-left slant if you will,” he said. “I think you’ll see something else come out soon with a bit of a center-right bent to it–and that’s how we move down the road toward solving this.”

Corker called his 2014 effort “a good blueprint that preserved the 30-year mortgage,” but said circumstances might call for a slightly simpler plan now. “This is a piece of unfinished business. I will go into this next year knowing there’s going to be some intellectual heft to make this happen,” he said.

Tester pledged to continue to work with people who seek common ground on GSE reform. “As you meet with senators and representatives, urge them to keep housing finance and regulatory reform front and center on their plate,” he said. “Politics is like life; the harder you work the more successful you’ll be.”