Business leaders outline housing sector overhaul

“The principles released by Business Roundtable today are the first step in creating a sensible balance between private and public sector involvement in U.S. housing to drive up home ownership rates and put more Americans to work," he said. 

A BRT task force is working on more detailed solutions for an overhaul, the group said. 

“BRT CEOs are committed to housing policy reforms that will ensure the U.S. economy is once again boosted by the time-tested benefits of a robust U.S. housing market,” said BRT President John Engler.

The plan includes an overhaul of the private and public sectors by encouraging private lending and investment, enhancing standardization and transparency in mortgage finance, coordinating government action to provide stability and greater certainty, while ensuring the consistency of regulatory oversight along with examining ways to support extending credit.

And, on the public front, the plan would rework Fannie Mae and Freddie Mac by reducing taxpayer risk, encouraging market-based pricing, reducing their portfolios and refocusing the affordable housing strategy. 

The basics of the plan look similar to what other housing-related groups have recently advocated and reflect similar concerns. 

In early March, the National Association of Home Builders (NAHB) released a white paper calling for changes to the how the sector operates, including moving Fannie and Freddie to a new mortgage-securitization system backed by private capital and privately funded federal mortgage-backed securities.

In January, the Federal Reserve released a white paper of its own on suggesting changes to revitalize the sector. 

The NAHB and the Mortgage Bankers Association (MBA) agreed with the Fed's findings, saying it offered up viable options to boost the ailing housing market and lift the broader economy. 

"Removing the obstacles limiting access to mortgage credit and enabling builders to obtain construction loans to build in markets where demand is firming is imperative to get housing back on track, to put our nation back to work and to keep the economy moving forward," said NAHB Chairman Bob Nielsen.

The lack of available credit extends to housing construction loans as well, "which is crippling the housing industry and preventing construction of new homes in markets that need and want them," Nielsen said last month. 

Just over a year ago, Treasury Secretary Timothy Geithner asked Congress to approve legislation overhauling Fannie Mae and Freddie Mac within two years, a deadline that won't likely be met.

Democrats and Republicans have expressed frustration over the lack of a plan to overhaul Fannie and Freddie and reduce their involvement in the mortgage finance market but while there have been more than a handful of proposals, none has gained enough traction and probably won't in an election year.