CUNA Chief Economist Bill Hampel will testify Tuesday before the Senate Banking Committee’s Securities, Insurance and Investment subcommittee regarding the need for credit unions to retain access to the secondary mortgage market as Congress mulls major reform.
The Housing Finance Reform and Taxpayer Protection Act, introduced June 25 by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), would wind down Fannie Mae, Freddie Mac and the entire FHFA within five years, sell off their assets and revoke their federal charters. Like the Protecting American Taxpayers and Homeowners Act soon to be introduced in the House, individual loans would be packaged into securities by private investors, although the House bill would also allow for Federal Home Loan Banks to serve as loan aggregators.
However, the Corker-Warner bill differs from the GOP-supported House bill in that the Senate bill would replace the FHFA with a Federal Mortgage Insurance Corp. that would retain some form of the federal guarantee currently provided by Fannie and Freddie.
Despite language in both bills that reassures community lenders they would retain access to the secondary market, trade associations for both credit unions and banks have expressed doubt the legislation would ensure unfettered access in practice.
The Corker-Warner bill has just eight co-sponsors, and Banking Committee Chairman Tim Johnson (D-S.D.) said in June when the bill was introduced that the committee would first tackle the “more timely issue” of Federal Housing Administration solvency before attempting housing finance reform.
The PATH Act has considerably more momentum in the House; the Financial Services Committee is scheduled to begin mark up on that bill Tuesday. While the bill has strong Republican support, House Democrats oppose it and are fighting Chairman Jeb Hensarling’s (R-Texas) efforts to complete mark-up before an upcoming Congressional recess that spans most of August.
Hampel will be joined at Tuesday’s hearing by other witnesses that include two bankers representing the Independent Community Bankers of America and the American Bankers Association, the President of the Federal Home Loan Bank of Topeka and a Federal Housing Finance Agency executive. The hearing begins at 3 p.m. in the committee hearing room on Capitol Hill. –email@example.com