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Rep. Jeb Hensarling, R-TX, received thousands of cheers from attendees during the Mortgage Banker’s Association 100th Annual Convention and Expo Tuesday as he painted the Dodd-Frank Act as the real threat to mortgage finance reform.

The implementation of Dodd-Frank rules is another notch in Washington’s belt to micromanage the mortgage market and ultimately reverse any progress made in the rebuilding of the mortgage finance system, Hensarling told the audience.

Dodd-Frank could increase interest rates between one and four percentage points, while cutting in half the number of mortgages issued, Hensarling asserted. More importantly, Dodd-Frank could double the cost of mortgages that remain in the pipeline, the chairman of the House Financial Services Committee said.

As a result, Hensarling and other Republicans introduced the Protecting American Homeowners and Taxpayers Act earlier this year to combat potential headwinds.

"PATH Act reverses Dodd-Frank rules by providing lenders and other market participants with relief of litigation risks, ending points and fees, and prohibiting the GSEs and FHA from doing harmful business to taxpayers such as eminent domain," Hensarling stated.

The committee chairman addressed many concerns industry experts addressed as flaws in the proposed bill’s write-up, including the elimination of the 30-year, fixed-rate mortgage.

The legislation currently states that the 30-year FRM will continue to exist under the PATH Act since those types of mortgage products were being offered before the onset of the crisis, Hensarling noted.

The one initiative that sets the PATH Act apart from other proposed bills in Congress is the wind down of Fannie Mae and Freddie Mac over a five-year time span.

In conjunction, the Federal Housing Administration will also receive a facelift, loosening its grip on taxpayer dollars, Hensarling said when discussing the bullet points included in the PATH Act.

The FHA announced its first-ever automatic $1.7 billion draw from Treasury this year, a further indication for Hensarling that the housing agency needs to step out as a dominant mortgage-market player.

"It’s time for housing finance reform, so we do not have to call on taxpayers once again to bailout a fundamentally flawed system again," Hensarling concluded. 

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