By Charles L. Westmoreland | Southeast Living
The National Association of Realtors (NAR) in June announced its support of a piece of bipartisan legislation that would reform the current U.S. housing finance market, a move the organization believes will better protect taxpayers and provide access to affordable mortgage loans in the long term.
“… The NAR believes that a methodical, measured and comprehensive approach for reforming the secondary mortgage market is in the best interest of home buyers and taxpayers,” said NAR President Ron Phipps. “A comprehensive and effective mortgage reform strategy is critical to help keep a level of certainty in the marketplace and not further disrupting the still fragile housing market recovery.”
The NAR is the nation’s largest trade association and represents 1.1 million members working in real estate and related industries. Specifically the NAR is supporting H.R. 1859, also called the “Housing Finance Reform Act of 2011,” introduced in May by Reps. John Campbell (R-Calif.) and Gary Peters (D-Mich.). The bill would phase out government-sponsored entities such as Fannie Mae and Freddie Mac and set up a system that allows new entities, called Housing Finance Guaranty Associations (HFGAs), to replace them. The HFGAs would be private firms that issued federally guaranteed mortgage-backed securities.
“This is a reasonable, bipartisan approach to achieving two key goals: putting an end to taxpayer-funded bailouts and ensuring that responsible, middle class families can still achieve the dream of home ownership…” said Peters, one of bill’s cosponsors.
The bill would ensure the availability of affordable residential mortgages to qualified borrowers; provide incentives for private sector capital to support the secondary market for mortgages; limit the role of the Federal government in the secondary market; and phase out the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
“While NAR has concerns with some aspects of the legislation, we strongly support the bill’s comprehensive approach to reforming the secondary mortgage market and greatly appreciate the efforts of Reps. Campbell and Peters to protect the affordable 30-year fixed rate mortgage, shield taxpayers from unnecessary additional bailouts, and ensure the availability of mortgage capital to all markets under all economic conditions,” Phipps said.
NAR is also opposing what it calls a “piecemeal approach” of other recent proposals that would “quickly constrain or shut down existing secondary mortgage market facilities” before identifying a viable replacement that would allow securitization to function under all market conditions.
“We believe that a fully private system is not a viable or sustainable alternative to the existing housing finance system and will severely restrict mortgage capital, raise costs for qualified, credit-worthy home buyers, and place taxpayers at greater risk as too-big-to-fail government-backed financial institutions dominate the market,” Phipps continued. “NAR looks forward to working closely with Congress; the time has come to have a serious discussion about comprehensive reform of our nation’s housing finance system.”
Critics of the bill say it doesn’t do enough to prevent a future government bailout.