Magazine article Mortgage Banking

Jumping Stumps in Washington

Magazine article Mortgage Banking

Jumping Stumps in Washington

Article excerpt

IT MIGHT NOT RANK AS HIGH on the list of country euphemisms as "This dog don't hunt." But when former Senator KIT BOND (R-Missouri) said reworking the nation's housing policy is "no small stump to jump," he interjected a tad of backwoods humor into an otherwise deadserious press conference in late February at the Newseum in Washington, D.C.

But former Senate Majority Leader GEORGE MITCHELL (D-Maine), one of four co-chairs of the Bipartisan Policy Center (BPC) Housing Commission, along with Bond, former Department of Housing and Urban Development (HUD) Secretary and Senator MEL MARTINEZ (R-Florida) and former HUD Secretary HENRY CISNEROS, said the fact that 21 industry leaders who represented all facets of housing could agree on a blueprint for the future is proof that people with strictly held political ideology can work together. The press conference was called to release BPC's "Housing America's Future: New Directions for National Policy."

"One of our objectives is to demonstrate that this can be done," Mitchell said. "We don't present this report as a piece of legislation. We present it as a set of ideas and principles, as an example of what can be done in our country and what our country needs."

The report calls for the winding down and eventual elimination of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac over a five-to 10-year period. The GSE business model--publicly traded companies with implied government guarantees--"has failed and should not be repeated," it stated. Added Martinez: "The implied guaranty was always hanging there. That should not be replicated."

The panel would replace the GSEs with a "public guarantor," a federal backstop that would promise investors the timely payment of principal and interest but would come forward only after the capital of all others in the chain--borrowers, private capital enhancers, servicers and security issuers--has been exhausted.

The bipartisan group also would return the Federal Housing Administration (FHA) to its pre-crisis roots by gradually reducing its loan limits. But if Rep. JEB HENSARLING (R-Texas) had his way, he would ride herd on the beleaguered housing agency.

At a hearing early in February on the proper role of the FHA, the House Financial Services Committee chairman opened with a strong rebuke. …

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