By Vicki Needham - 07/13/13 05:55 PM EDT
Prospects for a speedier overhaul of the housing finance system are improving, but the process could still take upward of two years.
David Stevens, head of the Mortgage Bankers Association, said the latest plan released from the House on Thursday is a good sign that momentum is building around the need for an overhaul as mortgage giants Fannie Mae and Freddie Mac near their fifth year under government control.
Still, the effort could take into 2015 or possibly into the presidential election year as lawmakers look to hammer out a compromise bill that can be signed by President Obama.
"With the pace of change in Washington, it's easier to bet that things move slowly, but the momentum is clearly picking up," Stevens said.
"You can't underestimate the extraordinary importance of getting it done," he said.
Stevens surmises that outside events could prompt more urgent action from Congress — junior preferred stockholders have filed a class-action lawsuit for lost dividends as all profits from Fannie Mae and Freddie Mac are now being steered into the Treasury Department's coffers.
Fannie and Freddie needed about $187 billion to stay afloat during the 2008 financial crisis and have been generating dividends that are being sent to the Treasury.
Jerry Howard, president and chief executive of the National Association of Home Builders, is predicting a faster resolution that wraps up sometime in 2014.
He suspects that both chambers will be moving bills by late this year — based on how long they decide to stay in session — with an expectation that the House and Senate could meld their bills in conference some time next year.
Howard's whirlwind of a timeline is buoyed by the push being made by House Financial Services Committee Chairman Jeb Hensarling (R-Texas).
Hensarling and several GOP colleagues on the panel put out a discussion draft on Thursday, scheduled a hearing for July 18 and said they would mark up a bill before the August recess.
"We'll try to move process forward and try to do it as quickly as possible," Howard told The Hill.
Howard argued that when Congress wants to get something done they can "work very, very quickly."
There are other signs of progress, too.
Senate Banking Committee leaders announced on Thursday that they have reached a bipartisan agreement on legislation to overhaul the cash-strapped Federal Housing Administration (FHA), with details expected next week.
The Senate has said it would tackle FHA reform first, then move onto an overhaul of Fannie and Freddie, which, at this point, is being led by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), who introduced bipartisan legislation last month to wind down the government-controlled entities.
The newly generated House and Senate plans signal a turning point in the eye of housing experts that Congress is finally realizing that revamping the housing finance market is key to getting the economy clicking on all cylinders.
In the stronger economies, the housing market contributes about 12 percent of gross domestic product but, after the crash, that dropped to 2.4 percent in early 2011.
"From the perspective of housing industry, the sooner we get out of limbo the better," Howard said.
While his group isn't 100 percent satisfied with either of the two leading proposals, he applauded lawmakers for tossing their ideas into the legislative hat and stirring the long-awaited debate.
Still, there are a slew of other legislative priorities — a debt-ceiling increase, the farm bill, immigration, tax reform and weighty mid-term elections in 2014 — that could push back work on housing finance.
But Howard said focus on the big issues may provide the time for committee leaders in the House and Senate to work out their differences below the surface of larger debates and move toward forging a bipartisan deal.
"I've seen it happen time and time again," Howard said. "Don't count anything out."
Stevens is suggesting that as lawmakers hash out their broad differences, a series of steps can be taken without congressional action, putting Fannie and Freddie into a position for the broader legislative overhaul.
But those mid-term elections tend to be a major distraction for lawmakers.
Yet Howard argued that the reform is too important and can supersede those election pressures.
"When lawmakers work in a bipartisan fashion any issue can be election-proof," he said.
"Those who want to see the economy improve should want to see this issue addressed."