NAFCU withheld full approval of the housing reform proposal put forward by Republican legislators this week, but found other parts of the bill more favorable.
Representative Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, joined fellow Republicans to offer the measure Thursday.
The proposal would eliminate Fannie Mae and Freddie Mac, establish a separate non-profit organization to oversee the secondary mortgage market and sharply limit how many loans receive federal mortgage insurance.
NAFCU CEO Fred Becker thanked Hensarling for the proposal and noted that it is good to start the conservation.
“The unveiling of this legislation is an important part of the housing finance reform debate,” Becker said in a statement. “Still, we have serious concerns about the lack of a government role in the future of housing finance in this bill and the impact that omission could have on reliable access for credit unions to the secondary market.”
But Becker also praised parts of the proposal that echoed some of NAFCU's long-held concerns about federal regulation.
“NAFCU is also encouraged, however, that the discussion draft includes provisions sought by credit unions to address shortcomings of mortgage-related rules issued by the Consumer Financial Protection Bureau,” Becker added.
“These provisions, including key changes to the definition of ‘points and fees’ under the ‘ability-to-repay’ rule, set to take effect in January next year,” he said, “will address unfair and unnecessarily restrictive aspects of the CFPB’s rules and help ensure that credit unions can continue to serve the mortgage needs of their 96 million member-owners rather than focus on misguided regulations that will cause unprecedented compliance and legal burdens.”.
Meanwhile, Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, took a much dimmer view of the proposal, which she said was crafted without any cooperation from Democratic lawmakers.
'“I am strongly disappointed in the chairman’s legislation, which is little more than an attempt to reinvent America’s housing finance system using the same kind of right-wing ideology that has eroded America’s middle class for decade,” Waters said.
“This bill eliminates the 30-year fixed rate mortgage as we know it and consigns future generations of homeowners to the types of high interest, balloon-payment mortgages that caused the financial crisis,” she said.
“This is by no means a bipartisan bill. By presenting such an extreme proposal—with no input from Democrats—the chairman stands in stark contrast with his colleagues in the Senate and has made it clear that bipartisan housing finance reform is not his priority,” she said.
A bipartisan bill that also would eliminate the GSEs was introduced recently in the upper chamber.