True Stories: Hybrid, eNote and RON Implementation

Join expert panelists that will discuss the status of federal legislation, trends in digital adoption and how best to prepare your organization for the next generation of lending processes.

Logan Mohtashami talks jobs report, mortgage forbearance

Lead Analyst Logan Mohtashami discusses his recent article on the latest jobs report and the most likely impact on the housing market and mortgage forbearance.

UWM has a plan to win a war of mortgage attrition

UWM's margins will fall all the way down to 75 to 110 bps. Mat Ishbia says it's the perfect environment to prove that his mortgage firm is truly elite.

Lunch & Learn about underserved markets and affordable housing

Experts in this discussion will focus on how the mortgage industry is working to right previous wrongs and champion a housing market that serves all.


Johnson-Crapo reform bill voted to Senate floor

Opponents say GSE reform measure won't go farther

The Senate Committee on Banking, Housing, and Urban Affairs put its hand to the future of GSE reform Thursday, voting to report Johnson-Crapo out of committee and to the full Senate.

Johnson-Crapo supporters on the committee had enough votes to approve the bill, but several Republicans and several Democrats remained opposed.

The final vote was 13 to 9, a smaller margin than supporters hoped for. With three more votes it would have forced the full Senate to vote on the legislation.

“This bill does not do enough for housing market needs of middle class America,” said U.S. Sen. Elizabeth Warren, D-Mass. “It is harder to get a Freddie or Fannie mortgage than at any time in history. (Johnson-Crapo) would cut the pool of qualified borrowers by 20%. Think about that, one in five families who would be eligible today would not be.”

Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, worked against a diverse range of interests opposed to the Senate bill.

“This bill represents our effort to draft the final chapter of financial reform by addressing the most significant unresolved issue from the financial crisis – the housing finance system,” Johnson said.

If the bill were to pass the Senate now, Fannie Mae and Freddie Mac would be wound down and shareholders left with little from the liquidation.

However, most observers say that even if the bill were to make it to a Senate floor vote and pass, both of which are in question, it would not pass the House.

With control of the Senate up for grabs in the mid-term and Republicans currently favored to wrest control, Johnson-Crapo has a rough road ahead and little in the way of extra fuel.

Opponents weren't shy about saying Johnson-Crapo would be dead on arrival.

“The passage of the Johnson-Crapo bill by the Senate Banking Committee in a 13 to 9 vote is an unfortunate move by the committee, though we are confident the victory by its supporters will be short lived. Across the political spectrum, people have come to realize that this bill is not a true reform as it does not protect property rights and it actually keeps in place the mechanisms that could lead to another financial collapse," said Coalition for Mortgage Security director Ken Blackwell. "There is a bipartisan consensus on how to wind down Fannie Mae and Freddie Mac, while protecting property rights and shareholders and limiting the role of government in the housing marketplace. This bill is not that solution and Congress needs to take its time and address all the concerns that have been raised in order to achieve a real reform that helps homeowners, investors and the economy.”

Johnson-Crapo is one of four GSE reform measures on the Hill. The other primary contenders are the House’s PATH Act, the House’s HOME Forward Act, and the Senate’s Corker-Warner. (The full report on the measures from the Structured Finance Industry Group can be found here.)

Groups such as the Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders, the National Housing Conference, the Mortgage Bankers Association and Habitat for Humanity support GSE reform.

“We applaud the efforts of Senate Banking Committee Chairman Tim Johnson and Ranking Member Mike Crapo and the members of the Banking Committee in advancing housing finance reform,” said National Association of Federal Credit Unions President and CEO Dan Berger. “We still have concerns about the bill and its impact on credit unions, including the potential cost of the proposal and whether it would be workable. It is important that any ultimate housing finance reform package work for credit unions and their 97 million members, and we look forward to working with the full Senate to address our concerns should the legislation come to the Senate floor.”

Credit Union National Association President and CEO Bill Cheney likewise endorsed the committee’s actions.

“It’s critical that government-sponsored enterprise reform ensures equal and competitive access for credit unions and other small lenders to the housing finance market – and avoids further concentration of the primary and secondary mortgage markets to Wall Street and the largest of lenders. This legislation takes significant steps toward accomplishing both. Our thanks to Chairman Johnson and Ranking Member Crapo for their leadership.”

Bipartisan Policy Center Housing Commission co-chairs Secretary Henry Cisneros and Senators George Mitchell, Kit Bond and Mel Martinez released the following statement after the vote.

“Our nation’s government-dominated housing finance system is unsustainable and continues to pose unacceptable risks to our nation’s taxpayers and the overall economy. At the same time, too many creditworthy families are being shut out of the mortgage market altogether, in part because the uncertainty surrounding the future architecture of our mortgage system has discouraged lending and dampened the housing market,” the statement read.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, who backs the PATH Act, said Johnson-Crapo was simply a wealth redistribution scheme.

“The fact remains the window for action this year is quickly closing, and I fear it may already be too late during this Congress with an already full agenda to get meaningful reform bills through both chambers.  Additionally, while there are several commonsense provisions in Senate bill that are similar to those we included in the PATH Act, the Senate bill features a controversial and irresponsible new politicization of mortgage credit insisted by Senate Democrats under the guise of affordable housing.  This wealth redistribution scheme, far worse than that of the current system, would be a multi-billion dollar annual invitation to return to the lower credit standards, higher risks, and unsustainable lending that created the crisis in the first place.

Former Treasury Secretary Timothy Geithner expressed reservations about the bill on Fox News.

“If people are worried … are we going to recreate or preserve the same set of systems that contributed to the crisis, that’s a very valid concern. We shouldn’t do that,” Geithner said.

More than two dozen free market organizations including the Competitive Enterprise Institute, the National Taxpayers Union, and the Club for Growth, as well as a coalition of hundreds of affordable housing advocates, oppose Johnson-Crapo.

Free market advocates are worried that Johnson-Crapo is a solution worse than the problem and have called Johnson-Crapo the "ObamaCare of housing reform.”

Most Popular Articles

How appraisers value homes in a hot housing market

How do appraisers value a home in a market where prices are escalating rapidly – and where nearly two-thirds of listed homes faced bidding wars in March? HW+ Premium Content

May 13, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please