A top priority for the House Financial Services Committee after the GOP takes control next month will be to revise aspects of the Dodd-Frank Act, according to Rep. Randy Neugebauer, R-Texas, and a member of the committee. In an interview with MortgageOrb.com Wednesday, Neugebauer said the revisions could range from ‘technical fixes’ to full rescissions.
‘I think what we're all wondering when it comes to a complicated piece of legislation like thisâ�¦is what are the unintended consequences,’ Neugebauer said. He noted that areas of particular concern include the Consumer Financial Protection Bureau (‘The way it's tucked into that legislation and into the Fed doesn't really leave room for Congress to have much oversight of that agency’) and provisions dealing with derivatives.
The GOP-controlled committee will closely monitor the progress of and responses to various agencies' rulemaking processes under Dodd-Frank, Neugebauer says, ‘so we don't have to go back and overrule agencies on every rule they come out with.’
The matter of exactly who will lead the House Financial Services Committee come January remains up in the air. The Republican Steering Committee is poised to name its choice sometime next week, according Neugebauer. The two leading candidates are Rep. Spencer Bachus of Alabama and Rep. Ed Royce of California. This week, Royce gained the endorsement of the American Conservative Union.
Regardless of who is named as successor to Rep. Barney Frank, D-Mass., Republican leadership in the House will likely push committee members to prioritize legislation targeting Fannie Mae and Freddie Mac, as well as broader housing-finance reform.
The U.S. Treasury Department is slated to offer its proposals for reforming the government-sponsored enterprises next month. Neugebauer says the GOP, while ‘anxious’ to see the Obama administration's suggestions, will ‘not necessarily wait on them.’
Neugebauer said he hopes to ‘at least have some blueprints’ and begin holding hearings on housing finance within the first quarter.
‘If we can get close and there seems to be a consensus, then I think the [GOP] leadership is going to want us to put a bill out on the floor sooner rather than later,’ he said. Reform will have to be handled in the context of an evolving mortgage market, thanks to the Dodd-Frank Act, Neugebauer additionally noted.
Although he stated that the entire chain of mortgage finance – from underwriting through servicing – needs ‘more uniform standards,’ Neugebauer said that a nationwide standard for foreclosure would risk infringing upon states' rights. One possible way to bring state foreclosure timelines and laws in line would be through risk pricing, he suggested.
Fannie Mae, Freddie Mac and the Federal Housing Administration, for example, could compensate servicers according to the length of time it takes a lender to regain its collateral in a particular state. Servicers would be better compensated in states where timelines are especially long, with the added costs being passed on to homeowners. Such a structure would encourage state legislatures to change their foreclosure laws in order to decrease the cost of housing, Neugebauer said.
‘Maybe you don't [achieve uniformity] by a federalization of servicing agreementsâ�¦but if you do it with pricing, that will certainly put some pressure on those legislatures to work in a more uniform way just to bring some market forces in,’ he said.