Reform Elusive in 2014
The complexity of reforming the secondary mortgage market, combined with its risk and Congress' inability to compromise, are the three reasons industry lobbyists and housing experts don't expect its completion in 2014.
In the wake of President Barack Obama's re-election in 2012, some housing finance experts and credit union lobbyists had believed Congress might have completed a market reform package before the mid-term elections later this year.
But strong congressional divisions persisted and make it highly unlikely that Congress will send secondary mortgage market reform to the White House in 2014.
“I agree that obstacles that were in place in 2012 have largely remained in place,” remarked Brad Thaler, NAFCU's vice president of regulatory affairs, “and congressional conflict is one of them. But there are others, too.”
In addition to political infighting, Thaler and other credit union lobbyists pointed out that not only is the topic very complicated, it also carries a good deal of risk.
“Nobody wants to get it wrong,” Thaler said. “Especially now that home prices have begun generally rebounding and there is a feeling that Fannie Mae and Freddie Mac are doing better. They're making money. Nobody wants to be seen as rocking the boat going into an election.”
But Thaler also pointed out that work on the legislation hasn't stopped even if it is unlikely to make it to completion this year. Legislation in the House awaits action from the House leadership to make it to the floor, and senators have been working among themselves to build a bill that could pass.
In some ways, legislators working on the topic might have kept it below radar as well, Thaler observed, since it seemed more progress might be possible among smaller groups of interested and motivated legislators than through contentious and partisan hearings.
Ryan Donavan, CUNA's senior vice president of legislative affairs, agreed with Thaler that it is very unlikely that Congress overall will pass any secondary mortgage market reform this year.
But he also thought it possible that a secondary mortgage market reform measure could make it out of the Senate Banking Committee and into the full Senate.