Tags: House | FHA | housing | PATH

House Takes (Shining) PATH Toward Housing Reform

By    |   Tuesday, 23 Jul 2013 01:54 PM

The legend of Yogi Berra extended its scope to international proportions when one of the politicians involved in the Egyptian crisis quoted Berra and said, "It's deja vu all over again."

The strategy of the House Republicans on housing policy is not only deja vu, but it also recalls another Berra saying — "When you come to a fork in the road, take it."

On July 18, the House Financial Services Committee, chaired by Jeb Hensarling, R-Texas, held a six-hour, two-panel hearing on a bill called the Protecting American Taxpayers and Homeowners (PATH) Act of 2013. The bill is supposed to be the committee's bid to make good on longstanding promises to reform the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac, three broken entities in the constellation of agencies established to support the housing industry that always seem to fail in spectacularly expensive fashion.

In his opening statement, Hensarling proclaimed, in effect, that this is the bill those who have been following the issue of so-called housing finance reform have been waiting for, because it will restructure the housing finance system so that it supports the housing industry without exposing taxpayers to undue risk or consumers to predatory lending. He declared further that the Committee plans to vote on the bill before the August recess.

Another claim of the sponsors is that the legislation will help to bring private capital into mortgage finance to ward off taxpayer losses.

Readers can follow this link to find a section-by-section analysis, which is a standard tool for legislators. It shows that the bill is comprised of five titles:

I. Wind-Down of Fannie Mae and Freddie Mac

II. FHA Reform

III. Building a New Market Structure

IV. Removing Barriers to New Investment

V. Miscellaneous Provisions

Essentially, the first three titles would replace the existing system with a similar one backed by an explicit government guarantee, while the last two titles are a grab bag of special-interest provisions, like exempting community banks from the capital requirements of Basel III.

In response to Hensarling, the ranking Democrat, Maxine Waters, D-Calif., labeled the bill a "nonstarter" and leveled a list of charges that it 1) ends the 30-year, fixed-rate mortgage, 2) hurts community banks and credit unions, 3) undercuts the FHA, 4) promotes "bank-centric" covered bonds, 5) repeals mortgage regulations, 6) abolishes the Affordable Housing Trust Fund, 7) eliminates Fannie Mae and Freddie Mac from multifamily housing finance and 8) codifies the implicit government guarantee instead of providing an implicit guarantee.

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Robert-Feinberg
The legend of Yogi Berra extended its scope to international proportions when one of the politicians involved in the Egyptian crisis quoted Berra and said, "It's deja vu all over again."
House,FHA,housing,PATH
415
2013-54-23
Tuesday, 23 Jul 2013 01:54 PM
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