By Vicki Needham - 07/24/13 02:09 PM EDT
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 Garrett (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 Warner (D-Va.) and Bob Corker (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.