U.S. Sens. Bob Corker (R-TN), Mark Warner (D-VA), David Vitter (R-LA) and Elizabeth Warren (D-MA), all members of the Senate Banking, Housing and Urban Affairs committee, in an effort to spur housing finance reform nationwide, have jointly introduced the “Jumpstart GSE Reform Act.” The Act would prohibit any increase in the guarantee fee–which is required to be charged by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac–from offsetting other government spending. Additionally, the bill would prohibit the sale of preferred shares without congressional approval and structural housing finance reform. The preferred shares were purchased by the U.S. Treasury Department during the 2008 financial crisis and are within Treasury’s discretion to sell or otherwise dispose of. Any premature actions outside of structural reform will only build obstacles to a new housing finance system.
“The reality is that if Congress were to spend ‘g’fee’ revenue from the GSEs on other programs, reforming these mortgage behemoths would become nearly impossible," said Sen. Corker. "At the same time, if Treasury were to decide to sell its preferred share investment without Congress having first reformed our housing sector, we would just be returning to a time where gains are for private shareholders and losses are for taxpayers. Neither of these is an acceptable outcome, so I’m very happy that Senators Warner, Vitter and Warren have joined me in this effort, and I hope Congress will take the necessary steps to ensure housing finance reform can happen as soon as possible."
David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), said, “It is imperative that Congress as well as the White House and key members of the housing community come together to create a comprehensive, transparent process that properly addresses the concerns and objectives of all affected stakeholders involved with GSE reform. Without this all inclusive, broad approach, uncertainty will continue and the housing market will be unable to fully rebound.”
“It has been nearly five years since the financial crisis, and it is past time to reform Fannie and Freddie," said Sen. Warren. "That means removing the obstacles and starting a bipartisan effort to take on housing finance reform this Congress. I am pleased to have the opportunity to work with Senators Corker, Warner, and Vitter, and I look forward to collaborating with them and other Senators in the months ahead on this important issue."