Once the tumultuous debt ceiling negotiations settle, Washington officials said the Obama administration will begin a revitalized effort to address lingering concerns in housing finance reform.
When debt ceiling talks resolve remains a question. President Obama took to a town hall meeting Friday morning urging lawmakers to forge a deal, but the Senate rejected a House plan later that afternoon. New developments late Friday indicate Rep. John Boehner (R-Ohio) walked away from talks with Obama to find common ground on a long-term deal.
But if Washington ever strikes a debt ceiling deal, the still struggling housing market awaits.
Already, plans are being drawn.
A spokesperson for Rep. Barney Frank (D-Mass.) told HousingWire Friday the Obama administration has begun work on a proposal to extend the conforming loan limits, which are set to expire in October. In February, the administration put out a white paper, providing Congress three options for winding down mortgage giants Fannie Mae and Freddie Mac.
Allowing the conforming loan limits – the maximum size of a mortgage the government can guarantee or buy – would be the first step toward allowing the private market to rejuvenate, the administration said at the time.
However, funding for mortgages outside Fannie, Freddie or the Federal Housing Administration remains barren, even according to one of the industry's largest trade groups, the Mortgage Bankers Association.
"[Rep. Frank] believes that the administration is working on an extension, but he doesn’t know what legislative vehicle would be used," the spokesman said.
Rep. John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.) introduced a bill last week that would extend the elevated loan limits for another two years.
"The Obama administration’s reported support of an extension of the conforming loan limits is welcome news for middle-class homeowners," Ackerman said. "The administration understands that the painful cycle of foreclosures, distressed sales and deep price declines will continue to weigh on the economy if nothing is done to support the housing market."
But other issues remain, including what to inevitably do with Fannie and Freddie. Aside from the slew of legislation passed by Republican members of the House Financial Services Committee – some receiving Democratic support as well – no bill on what to replace the government-sponsored enterprises with has yet to be considered by the committee.
Democrats and Campbell criticized the committee chair Rep. Spencer Bachus (R-Ala.) at a recent hearing for not taking up legislation and starting the process of installing a new housing finance system.
"I'm being criticized here for waiting on the administration. If they want to bring forth a comprehensive proposal, they have two or three weeks to do it," Bachus said at the time.
"Until we have a mechanism in place, we are threatening this economy," Campbell said.
There is also the matter of the Consumer Financial Protection Bureau gridlock.
Obama nominated Richard Cordray as the new bureau's director on Monday, but a group of 44 Republican Senators threatened to filibuster the approval until the president agrees to their terms for restructuring the agency, which includes installing a commission and providing more powers to its oversight committee.
Obama maintained this week that he would veto legislation passed by the House that would bring these changes to the CFPB.
According to the MBA, mortgage originations are expected to drop to $1 trillion for the year. The robo-signing scandal last year pushed up to 1 million foreclosures to next year and new filings continue to mount.
Several smaller lenders testified before Congress this week that regulatory uncertainty need to be addressed so their companies can comply and move on.
Ackerman acknowledged the need to move decisively, as well as quickly.
"With so much at stake for American families, inaction is not an option," Ackerman said.
Write to Jon Prior.
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