Magazine article American Banker

Housing Advocates Criticize Johnson-Crapo GSE Bill

Magazine article American Banker

Housing Advocates Criticize Johnson-Crapo GSE Bill

Article excerpt

Byline: Victoria Finkle

WASHINGTON - A coalition of advocacy groups announced their opposition Friday to a bill by Senate Banking Committee leaders to overhaul the housing finance system, citing concerns about market access for low-income and minority families.

Sens. Tim Johnson, D-S.D., chairman of the banking panel, and Mike Crapo, R-Idaho, the ranking member, unveiled legislation last week that would unwind Fannie Mae and Freddie Mac and install a new housing system of mortgage securities backed with a government guarantee.

But housing advocates are warning that the bill could worsen ongoing inequality in the housing market, making it harder for lower income families to access credit to buy a house. The issue has been a long-simmering concern as the debate over housing finance reform gained momentum over the past year, and could prove a stumbling block for the legislation if liberal Democrats on the committee, including Sens. Elizabeth Warren of Massachusetts, Jeff Merkley of Oregon and Sherrod Brown of Ohio, subsequently refuse to sign onto the plan over it.

"The new Senate proposal to reform the housing finance system would needlessly make mortgages more expensive and less available," the groups said in a joint press release. "The goal of housing finance reform is to create a safe housing finance system that provides affordable mortgages to all creditworthy borrowers, including people of color and families with modest incomes and lower wealth."

Advocates said they have "serious concerns" that the legislation as written fails to meet that goal, though they added that they "look forward to working with the co-sponsors to improve the bill. …

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