A bipartisan commission of former Cabinet secretaries, former senators and other leading housing and economic experts unveiled a new vision for housing policy in America, which aims to further the nation’s economic recovery and improve the lives of millions of Americans. The recommendations propose scaling back the government role in the nation’s housing finance system and reforming housing assistance programs to better meet the needs of America’s most vulnerable households.
The commission is co-chaired by former Senate Majority Leader George J. Mitchell, former Senator Christopher S. “Kit” Bond, former Senator and HUD Secretary Mel Martinez, and former HUD Secretary Henry Cisneros, and includes 17 other individuals from diverse professional and political backgrounds.
The report from the Bipartisan Policy Center’s Housing Commission, entitled "Housing America’s Future: New Directions for National Policy," proposes a new housing finance system that calls for a far greater role for the private sector, a continued but limited role for the federal government, the elimination of Fannie Mae and Freddie Mac, and reform of the Federal Housing Administration (FHA) to improve efficiency and avoid crowd-out of private capital.
Through these reforms, the plan would address the broken mortgage finance system while creating a stable and strong housing market that provides greater taxpayer protection and supports a more vibrant economy.
“At this critical time in our nation’s history, we can no longer afford to defer bipartisan action on housing,” said the co-chairs in an op-ed in POLITICO. “We believe our report can serve as a framework for Congress and the administration to act in the best interests of all Americans.”
“There is widespread agreement that the government’s footprint in housing finance is currently too large," said David H. Stevens, President & CEO of the Mortgage Bankers Association (MBA). "The Commission’s report rightfully highlights the need for a greater role for private capital in bearing credit risk, while also acknowledging the continued desire for a limited government function to ensure sufficient mortgage liquidity for qualified borrowers, particularly in times of market stress."
The plan calls for reforms that would establish a new performance-based system for delivering federal rental assistance with greater devolution of responsibilities to state and local providers. The commission also proposes to shift existing resources to assist more effectively the most vulnerable households, and to preserve and expand the Low Income Housing Tax Credit program to increase the supply of affordable rental housing.
For first-time homebuyers, the report emphasizes the importance of housing counseling as a means of preparing for homeownership. The commission recommends proposals to enable seniors to “age in place” safely and affordably while integrating housing with health care and other programs. For the one-third of Americans who live in rural areas, the commission recommends continued support for homeownership and rental assistance in those communities.
“We are pleased to see that the Commission’s framework closely follows that of MBA and others who have called for a new secondary mortgage market structure where private capital is placed in the first-loss position, with a federal backstop of mortgage backed securities (MBS) paid for by the entities that issue or insure the MBS," said Stevens. "It is important that any secondary market proposal both meet policy objectives, in terms of ensuring secondary market liquidity, and support vibrant, dynamic, and competitive primary and secondary markets for the ultimate benefit of homeowners."