By Peter Schroeder - 04/22/14 04:37 PM EDT
The president’s top housing official warned lawmakers Tuesday that housing reform legislation pending in the Senate could be their best chance to change in the law in years.
Shaun DonovanShaun DonovanOvernight Finance: Dems turn up heat on Wells Fargo | New rules for prepaid cards | Justices dig into insider trading law GOP reps warn Obama against quickly finalizing tax rules Obama requests .6B in aid for Louisiana floods MORE, the Secretary of Housing and Urban Development, gave a strong endorsement of legislation due to be considered by the Senate Banking Committee later this month, calling it Congress’ best chance to rework the housing market in the foreseeable future.
Donovan was referring to the bill commonly known as Johnson-Crapo, after the Banking Chairman Tim Johnson (D-S.D.) and Sen. Mike Crapo (R-Idaho), the top Republican on the panel.
Lawmakers in both parties, as well as the White House, have argued since the subprime crisis that the nation’s mortgage market is in dire need of a makeover. Mortgage giants Fannie Mae and Freddie Mac continue to guarantee the vast majority of the nation’s mortgages, but had to be rescued by a government bailout and a widely seen as unsustainable.
But agreeing on a housing overhaul bill has long proven difficult. Many industry sources and several lawmakers are hoping Johnson-Crapo can gain traction as a bipartisan product, although few are expecting a new law to be enacted before the midterm election.
Donovan did what he could to help push the legislation along, saying that while it’s not perfect, it’s the best thing going.
“Is this bill perfect? Of course not,” he said. “Despite its imperfections, does this bill represent progress? Absolutely.”
Ahead of the April 29 markup, some members of Johnson’s panel have already aired support for the plan. Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), both committee members, worked together on a plan that provided much of the basis for the proposal.
The Senate bill would replace Fannie Mae and Freddie Mac with a single agency backed by the housing industry. The legislation would also set up tougher underwriting standards for new mortgages, including higher minimum down payments for all but first-time homebuyers.
While interested parties acknowledge enacting a housing finance reform law this Congress will be difficult, a strong and quick passage out of committee and the same treatment on the Senate floor could give it some needed momentum, Donovan said. Otherwise, the measure will be bogged down as lawmakers shift into a full-time campaign mode.
“If we can’t get this bill quickly from markup to the floor in the Senate, it will be very difficult to have a window to get this done in the House given the elections,” he said. “That is a real barrier.”
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has authored his own housing overhaul legislation, which would call for a drastically reduced role for the government in the housing market. That measure has passed his committee, but has yet to receive a vote in the full House amid concerns it could be too conservative for some members. The housing industry has argued the government needs to have an explicit role in the housing market to ensure credit remains broadly available.
The White House has pushed for reform, but largely declined to lay out a specific preferred approach. But Donovan called the Senate bill “an important and positive step forward,” and urged lawmakers to consider it promptly.