WASHINGTON (3/20/13)--The U.S. Congress should get to work and develop a plan for the future of the U.S. mortgage market, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Federal Housing Finance Agency Acting Director Edward DeMarco each said during a Tuesday committee hearing.
DeMarco was the sole witness at Tuesday's hearing, entitled "Sustainable Housing Finance: An Update from the Federal Housing Finance Agency on the GSE Conservatorships."
In his opening remarks, Hensarling said he is determined that the hearing would be the last time that DeMarco or another FHFA leader testified before the committee before true government-sponsored enterprise (GSE) legislation is marked up. "This I define as legislation to once and for all abolish Fannie Mae and Freddie Mac as government-sponsored enterprises. And two, one that would truly create a sustainable housing policy," Hensarling said.
In his own remarks, DeMarco noted that the conservatorships of Fannie Mae and Freddie Mac, which began in late 2008, "were never intended to be a long-term solution," but rather "were meant primarily as a 'time out' for the rapidly eroding mortgage market--an opportunity to provide some stability while Congress and the Administration could figure out how best to address future reforms to the housing finance system.
"The U.S. housing finance system cannot really get going again until we remove this cloud of uncertainty and it will take legislation to do it," DeMarco said. He noted that only Congress can abolish or modify the GSE charters "and set forth a vision for a new secondary market structure."
U.S. House and Senate members last week introduced separate bills addressing the government's role in that market. Overall, a range of mortgage market reforms have been discussed, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages.
The Credit Union National Association has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.
For more on the hearing, use the resource link.