House panel approves bill to overhaul mortgage finance system

Republicans touted the measure as a viable solution to revamping the mostly government-controlled mortgage finance market and said it would better protect taxpayers by dramatically reducing the government's role and spurring participation from private lenders. 

Rep. Scott GarrettScott GarrettHeitkamp breaks with Dems on regulations Business groups silent on Trump's Ex-Im nominee Trump should work with Congress to kill the Export-Import Bank MORE (R-N.J.), a chief sponsor of the bill, said repeatedly on Tuesday that the bill does not end the government guarantee, which will be maintained by the Federal Housing Administration (FHA). Garrett said the FHA would be overhauled to better target low- and moderate-income borrowers and, along with other government entities, would account for about 20 percent of the market. 

Still, despite the assurances, Democrats offered several amendments designed to maintain the 30-year fixed-rate mortgage, which they argue would become largely extinct under the bill because it would make the product inaccessible or unaffordable to a majority of borrowers. 

Some economists and industry stakeholders have expressed similar concerns with the bill. 

Democrats said they backed a bipartisan Senate measure — led by Sens. Mark WarnerMark WarnerOvernight Finance: GOP divided over welfare cuts in budget | Lawmaker loses M on pharma stock he pitched | Yellen says another financial crisis unlikely in our lifetimes Overnight Cybersecurity: Obama faces new scrutiny for Russia response | UK parliament cyberattacked | Election hacking fears put heat on DHS | Feds appeal to Supreme Court over data warrants Election hacking fears turn heat on Homeland Security MORE (D-Va.) and Bob CorkerBob CorkerLawmakers wary of Trump escalation in Syria Saudis say Qatar demands are non-negotiable Overnight Finance: GOP divided over welfare cuts in budget | Lawmaker loses M on pharma stock he pitched | Yellen says another financial crisis unlikely in our lifetimes MORE (R-Tenn.) — that leaves the government guarantee in place across a broader part of the market. 

The Republican measure has gotten some industry support, especially on the bill's delay of qualified mortgage rules that are set to go into effect in January and are required under the three-year-old Dodd-Frank financial reform law. 

The hearing underscored the complexity of the issue. In order for legislation to get through Congress, lawmakers will have to choose from a slew of ideas from both parties and players in the housing industry.