ORLANDO, FLA. - Officials from the Department of Housing and Urban Development reiterated their stance against the House of Representative's version of the GSE Regulation bill - which the House approved last week - at the Mortgage Bankers Association 92nd Annual Convention and Expo 2005 held here last week.
"Let me first say, that the House version is not the bill we can support," said Assistant Secretary for Housing Brian Montgomery in a speech delivered at the conference's third general session. Montgomery added that the Bush administration is committed to tightening GSE regulation and that the Senate version of the GSE bill is "what's best for all of us in the housing industry."
The administration has two goals, according to Montgomery. The first is to make sure that the GSEs continue carrying out their Congressionally mandated mission by promoting affordable housing and homeownership. The second is to make sure that the agencies are under "rigorous oversight" so that they serve their public purpose.
Montgomery said that the administration believes the HUD should continue to set and enforce housing goals, as the department's mission is focused on furthering affordable housing and homeownership. "HUD clearly has the most expertise in this area, and the industry looks to us as the agency in which this authority should reside." He stressed that to transfer this role away from HUD might delay the implementation of a new regulatory plan for years.
"We are pleased with the steps we have taken in the past year to increase Fannie Mae's and Freddie Mac's leadership in the affordable housing market," Montgomery stated, adding that both Fannie Mae and Freddie Mac could do as well as other conventional mortgage lenders as far as reaching out to lower income homeowners and underserved areas.
In his speech, Montgomery made it clear that HUD believes that creating a "world class" regulator would strengthen the GSEs' ability to serve low- and moderate- income families. It would also boost the confidence of GSE stockholders and provide investors with better protection,
and ultimately benefit the American people if the agencies were under "a regulatory system that empowers the regulator to do the job we expect of them," Montgomery said.
The MBA is currently advocating a "bright line" provision. This would allow the new regulator to define boundaries between the primary and secondary mortgage markets. Earlier this year, HUD Secretary Alphonso Jackson told the Senate Banking Committee that it does make sense to differentiate between the two markets. "I agree that the bright line' provision is something the administration should review more closely," Montgomery stated.
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