U.S. Reps John K. Delaney, D-Md.; John Carney, D-Del.; and Jim Himes, D-Conn., have introduced into the House new housing finance reform legislation known as the Partnership to Strengthen Homeownership Act, H.R.5055.
The legislation, which currently has nine co-sponsors, ‘combines the federal government's unique ability to provide capacity with the private sector's superior ability to price and analyze risk,’ according to a press release.
‘Congress has to act, and we are committed to keeping housing finance reform on the agenda,’ Delaney said. ‘By maintaining a government guarantee [and] introducing private-sector pricing and increased taxpayer protections, our legislation can bring both sides of the aisle together.’
Under the bill, all government-guaranteed single-family and multifamily mortgage-backed securities would be supported by a minimum of 5% private-sector capital that would be situated in a first-loss position. The balance of the risk would be shared between a Ginnie Mae insurance program and a private reinsurer, on a pari passu basis.
As for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, the legislation would implement the gradual phase-out of the organizations' current activities and revoke the GSEs' charters – but allow them to be sold and recapitalized as new entities.
‘The driving force behind my work on this bill is to keep home-buying affordable by preserving the 30-year fixed-rate mortgage, while protecting taxpayer dollars in the event of another housing downturn,’ Carney said. ‘We think our proposal has promise because it strikes the necessary balance between public- and private-sector involvement in the housing market.’
To read the bill, click here.
