A top Obama administration official wouldn't spell out its plans for reforming Fannie Mae and Freddie Mac but said the goals of any program will be to ensure available mortgage credit, housing affordability, consumer protection and financial stability.
Assistant Treasury Secretary Michael Barr told a House subcommittee that when the ministration sends its overhaul plan to Congress by January, the new structure will be different from the one that failed but will provide stability to the housing finance system.
"As we figure out what the new system should look like, we shouldn't disrupt the market and the ability of people to afford a home," Barr told the House Financial Services Subcommittee on Capital Markets at a Sept. 15 hearing.
He noted that since the government sponsored enterprises were conserved in September 2008, losses have been stemmed.
The vast majority of the losses came from loans originated and guaranteed in 2006, 2007 and 2008, Barr said. He added that the defaults on Fannie and Freddie loans during their first 18 months were 1.1% and 1.2%, respectively. By contrast, the default rates for loans originated in 2007 were 22.3% and 28.7%, respectively.
Subcommittee Chairman Paul Kanjorski (D-Pa.) said any reform must also protect taxpayers' money.
He said lawmakers must "begin to think about approaches for recouping the taxpayers' money in the long run. We found a way to pay for the savings and loan crisis, and we can surely find a way to recover costs associated with this crisis."
Neither CUNA nor NAFCU submitted a statement to the subcommittee, but both groups have said they will work to ensure that any changes to the GSEs will keep a secondary-mortgage market available for credit unions.
At the hearing, Democratic and Republican lawmakers spent part of the time taking partisan shots at one another and blaming one another for not doing enough.
Republicans said the Democrats had blocked efforts to reform the GSEs, while Democrats noted that Republicans took no action to deal with the problem when they controlled Congress between 1995 and 2007.
Kanjorski said the GOP's failure "allowed the housing crisis to fester into an ulcer."