By Vicki Needham - 05/15/14 03:23 PM EDT
The Obama administration applauded the approval of mortgage finance system overhaul legislation on Thursday but stopped short of calling for a Senate vote on the measure.
The Senate Banking Committee approved legislation 13-9 on Thursday but the measure got scant Democratic support — half of the panel's 12 Democrats opposed the bill — and faces an uphill fight to reach the floor for a vote.
"We have worked closely with the Senate Banking Committee to provide policy, technical and analytical support throughout the process to achieve these goals, and going forward, we will continue to work with the Senate to address affordability and access to broaden support for reform," he said.
Carney said President Obama remains committed to revamping the housing finance system to ensuring credit availability, preserving access to mortgage credit during severe downturns and protecting taxpayers from covering losses.
The bill was crafted by Banking Committee Chairman Tim Johnson (D-S.D.) and panel ranking member Sen. Mike Crapo (R-Idaho) and was based on the bipartisan effort started last year by Sens. Mark Warner (D-Va.) and Bob Corker (R-Tenn.).
Meanwhile, housing industry leaders urged lawmakers to bridge their differences and move quickly forward.
Former Housing and Urban Development Secretary Henry Cisneros and former Sens. George Mitchell (D-Maine), Kit Bond (R-Mo.) and Mel Martinez (R-Fla.), all co-chairmen of the Bipartisan Policy Center Housing Commission, urged the Obama administration to "encourage the full Senate to consider the bill as expeditiously as possible."
A vigorous floor debate has the potential to lead to additional refinements that can further improve this bipartisan bill," they said.
“Our nation’s government-dominated housing finance system is unsustainable and continues to pose unacceptable risks to our nation’s taxpayers and the overall economy."
David Stevens, head of the Mortgage Bankers Association, said getting the bill through committee "is an important step on the road to reform but plenty of work remains."
"MBA is eager to continue working with the members of the Senate, as well as other stakeholders, to find common ground and bring housing finance reform legislation to the Senate floor."
National Association of Home Builders Chairman Kevin Kelly said the bill would "increase private capital in the marketplace, ensure that 30-year mortgages remain readily accessible and available and protect American taxpayers."
"NAHB urges the full Senate to consider this legislation as soon as possible."
While some Republicans during the markup questioned the government's continuing role in the mortgage market, Frank Keating, president and CEO of the American Bankers Association, argued “the bill establishes a thoughtful and realistic framework for a limited federal role in the housing finance system.”
"While more work lies ahead before the full Senate considers the bill, today's action is a positive and needed step."
Still, concerns remain for housing industry stakeholders, including the effects of the measure on smaller lenders like credit unions.
Dan Berger, president and CEO of the National Association of Federal Credit Unions, said he is worried about the “potential cost of the proposal and whether it would be workable.”
Bill Cheney, president and CEO of the Credit Union National Association, said the measure much ensures equal access for smaller lenders while avoiding “further concentration of the primary and secondary mortgage markets to Wall Street and the largest of lenders.”
"This legislation takes significant steps toward accomplishing both."
Those concerns echo many of those aired by lawmakers on the Banking Committee who praised the efforts to craft the legislation but said they are worried that big banks will have the upper hand under the proposed new framework.
Camden Fine, president and CEO of the Independent Community Bankers of America, said his industry remains concerned that the measure would "cause further market concentration of the housing-finance system into a few of the largest financial institutions."
“Community banks must continue to be able to sell individual loans for cash, to retain servicing on those loans, and to access the secondary market without the complexity and costs associated with securitizing loans," he said.
Kenneth E. Bentsen Jr., Securities Industry and Financial Markets Association president and CEO, said that while additional work remains, the economy would benefit from the bill's reforms.
“In particular, SIFMA is pleased that the bipartisan bill emerging from the committee today contains flexibility to protect taxpayers from losses by requiring issuers to share risk with the private sector, maintains a focus on preserving the liquidity of and consumer benefits provided by the TBA market, and provides for a reasonable transition period to the new system," he said.
“We support efforts to reform the housing finance system as success in this area leads to economic growth and job creation as well as the restoration of a competitive mortgage market serving all Americans.”