WASHINGTON — Last week, the House passed the Federal Housing Finance Reform Act of 2007 (H.R. 1427)–better known as the GSE bill–by a vote of 313-104.
The legislation seeks to tighten regulatory oversight of the housing government sponsored enterprises by creating a new regulator that can limit portfolio growth of Fannie Mae and Freddie Mac for safety and soundness concerns. NAFCU had lobbied hard for the clarification that the portfolio caps could only be for safety and soundness reasons. "Credit unions are doing a lot of business with Fannie and Freddie and a cap could severely limit their ability to access the secondary market," NAFCU Director of Legislative Affairs Brad Thaler explained.
House Financial Services Committee Chairman Barney Frank (D-Mass.) was the primary sponsor on the measure.
A similar bill, S. 1100, was introduced in the Senate April 12 by Senator Chuck Hagel (R-Neb.), where it has been referred to the Senate Banking, Housing, and Urban Affairs Committee.
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"The bipartisan legislation backed by NAFCU and the administration would ensure the continued viability of the secondary mortgage market, allowing credit unions to obtain the necessary capital to create new mortgages for their members," NAFCU President/CEO Fred Becker said.
However, at least one credit union-oriented person is not happy with the bill. Federal Housing Finance Board Member Geoff Bacino commented, "I've spent pretty much all of my waking time since I've come here working against this bill."
The legislation would replace the FHFB, along with the Office of Federal Housing Enterprise Oversight, with one administrator. "Regulatory dictatorships don't work," the former NCUA Board member said. Bacino added, the legislation lumps the Federal Home Loan Banks in with Freddie and Fannie and does not take into account their 'unique' nature.
Thaler and Bacino agreed the bill faces some obstacles in the Senate. Even if a bill makes it through the Senate, both predicted a conference would be necessary to make the bills similar.
Additionally, the House bill would establish an off-budget and non-taxpayer financed affordable housing fund, which will dedicate hundreds of millions of dollars for the construction, maintenance and preservation of affordable housing with the first year of the fund to be dedicated to the hurricane stricken areas of the Gulf Coast, and billions of dollars over the next five years for affordable housing nationwide.
The Independent Community Bankers of America applauded the bill. President/CEO Camden Fine remarked, "These government-sponsored enterprises are vital to the nation's community banks and housing and mortgage markets. They play an important role in helping community banks provide credit and innovative products to their mortgage customers." Like NAFCU, ICBA was pleased with the portfolio cap clarification.
CUNA did not comment on the GSE bill.
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