May 15, 2014 Alert - Senate Banking Committee Passes Housing Finance Reform Legislation

The Senate Committee on Banking, Housing, and Urban Affairs (Committee) has passed S.1217, the Housing Finance Reform and Taxpayer Protection Act, as amended, by a vote of 13-9.  Chairman of the Committee, Senator Tim Johnson (D-SD), and Ranking Member,  Senator Mike Crapo (R-ID), introduced legislation to reform the U.S. housing finance system by winding down Fannie Mae and Freddie Mac and replacing them with a new system in which private capital would be in a first loss position prior to a catastrophic government guarantee being made available. This system would be regulated by the newly-created Federal Mortgage Insurance Corporation and backstopped by an explicit guarantee from a Mortgage Insurance Fund. The legislation builds upon a previous bill authored by Senators Bob Corker (R-TN) and Mark Warner (D-VA).

Two manager’s amendments, no. 2 and no. 98, passed the Committee to amend the bill. Summaries of these amendments are available here. An amendment that would prohibit federal entities from purchasing or insuring mortgage loans in municipalities that use eminent domain to seize underwater mortgages was defeated by the Committee in a 14-8 vote. With its passage by the Committee, the next question regarding GSE reform is whether Senate Majority Leader Harry Reid (D-NV) will bring the bill to a vote by the full Senate.

Please contact Amanda Bateman if you would like to participate on SFIG’s GSE Reform Task Force.

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