Treasury official at summit says Administration is “seriously considering” concerns on proposed mortgage rules
June 24, 2011
(JULY 6, 2011 - UPDATE: Rep. Miller has announced the mortgage finance reform bill he proposed at NHC's Policy Summit. An analysis can be found on NHC's Open House Blog.)
WASHINGTON—Rep. Gary Miller (R-CA) today announced plans to introduce a bill to reform the nation’s mortgage finance system during a policy summit convened by the National Housing Conference (NHC). About 200 people attended the event at the Columbus Club in Washington, D.C., where Miller offered views on the importance of the government-sponsored enterprises (GSEs) in providing access to credit for Americans.
“Fannie [Mae] lost money one year, in 1985,” Miller said in the opening speech. “Freddie [Mac] lost money never. Find me one lender that did that well.”
Bucking the consensus to immediately phase out the GSEs among his GOP colleagues, Miller hinted that the legislation will outline a more moderate approach to mortgage finance reform.
“If you want to hurt taxpayers, cut off the lending market,” Miller remarked. “If you want to hurt the housing market, eliminate the GSEs without providing a viable alternative.”
Miller declined to offer details of the bill but said that he and other lawmakers would introduce the legislation July 6.
Jeffrey Goldstein, Treasury’s undersecretary for domestic finance, said in the summit’s keynote speech that the Obama Administration is mulling concerns on finalizing the proposed risk retention rule drafted by federal regulators to fulfill provisions of the Dodd-Frank Act.
"We are seriously considering feedback and are committed to getting this rule right, so that we can ensure securitization is a stable and reliable source of credit for consumers, businesses and homeowners," Goldstein said.
The proposed rule includes a new definition for qualified residential mortgages (QRM), which are loans exempt from the risk retention requirement. The underwriting standards for QRMs laid out in the proposal include a required 20% down payment, strict debt-to-income ratios, and borrower credit history restrictions. Public comments were originally due on June 10, but in the wake of criticism from housing and industry groups including NHC, regulators announced on June 7 that they would extend the comment period until August 1.
The summit convened NHC members, housing leaders and experts from around the country to debate how to reform America’s housing finance system. Panelists and moderators included thought leaders from private development, banks, academia and nonprofits. Among them were David Stevens, President and CEO of Mortgage Bankers Association; Bart Lloyd, manager of acquisitions for Preservation of Affordable Housing; Willy Walker, Chairman, President and CEO of Walker & Dunlop; Susan Wachter, Richard B. Worley professor of financial management and professor of real estate and finance at the Wharton School; Lawrence J. White, Robert Kavesh professor of economics at NYU Stern School; Diana Reid, executive vice president of PNC Real Estate and Brian Montgomery, partner and co-founder of The Collingwood Group. Ted Chandler, chief operating officer of AFL-CIO Housing Investment Trust will also serve as a panel moderator.
A central theme of the final panel was that multifamily housing has performed better and requires different solutions for mortgage finance reform than does single-family housing.
“If it’s not broken, don’t fix it. And don’t break it,” commented Reid, articulating a consensus that emerged from the panelists.
The event followed NHC’s annual Housing Person of the Year Gala scheduled on June 23 at the National Building Museum, honoring Professor Nicolas Retsinas and Sister Lillian Murphy, RSM, and celebrating NHC’s 80th anniversary. Retsinas, director emeritus of Harvard’s Joint Center for Housing Studies, former FHA commissioner and a longtime fixture in national housing policy, moderated a key panel at the summit.