Two members of the House Financial Services Committee late Thursday introduced GSE reform legislation that would create new entities to issue government-guaranteed MBS.
The bill sponsored by Reps. John Campbell, R-Calif., and Gary Peters, D-Mich., would allow privately capitalized associations to purchase conventional mortgages from originators.
However, lenders with a voting interest in such an association would be banned from selling loans to these entities, which are referred to as 'Housing Finance Guaranty Associations' (HFGA). A HFGA could purchase mortgages from a lender that is a non-voting owner or partner.
The Federal Housing Finance Agency (FHFA) would charter and regulate HFGAs, issue guarantees on mortgage pools, set the guarantee fee and establish the underwriting standard for eligible conventional loans.
The Financial Services Roundtable and Mortgage Bankers Association (MBA) say they support the Campbell-Peters bill (H.R. 1895).
This bipartisan proposal "demonstrates that a consensus approach to reforming the housing finance system is building," said John Dalton, president of the Roundtable's Housing Policy Council.
Dalton said the bill would "create a modern private sector housing finance system, preserve bedrock financing like the 30-year fixed rate mortgage, and protect taxpayers."
But the American Bankers Association has concerns the bill does not provide enough room for a private mortgage market to thrive. "It is our view that the bill does not adequately allow for the development of a fully private segment of the mortgage market," said ABA vice president Joe Pigg.
H.R. 1895 also calls for the wind down of Fannie Mae and Freddie Mac over five years by shrinking their giant mortgage portfolios and raising their guarantee fees.