By Benjamin Goad - 08/13/13 04:05 PM EDT
The Dodd-Frank Wall Street reform law is making it harder for middle class families to buy homes, the chairman of the House Financial Services Committee charged Tuesday.
Rep. Jeb Hensarling (R-Texas) blasted the 2010 law during a speech in Dallas, where he pitched housing legislation that would strip away regulations drawn up in response to the 2008 economic crisis.
Hensarling pointed to recent congressional testimony from well-known economist Mark Zandi, who told the Financial Services Committee that just one of hundreds of regulations required by Dodd-Frank could raise mortgage interest rates by as much as 4 percent.
He also cited analysis from the firm CoreLogic showing that roughly half of the mortgage loans being made under current rules would violate regulations set to take effect in January.
“In other words, the Dodd-Frank Act could cut the number of mortgages in half and double the cost of those that remain,” Hensarling said. “It’s that bad.”
Earlier this year, the Consumer Financial Protection Bureau laid out a set of proposed regulations that would impose new “qualified mortgage” standards.
The regulations are designed to ensure that lenders verify the finances of would-be homeowners and that borrowers have enough income and assets to repay their loan.
But critics say they would unnecessarily limit the options of would-be homeowners and keep qualified borrowers out of the market.
Hensarling touted the Protecting American Taxpayers and Homeowners (PATH) Act, which is designed to ease the regulatory burdens by striking provisions meant to hold lenders accountable for the loans they make and requiring mortgage to retain some of the risk.
“The PATH Act addresses these devastating rules head on, getting Washington out of the way to allow banks to lend, builders to build, realtors to sell and home buyers to buy,” Hensarling said.
The legislation would also wind down Fannie Mae and Freddie Mac within five years and consolidate housing finance functions at the Federal Housing Administration.