Covered Bonds Bill Moves Forward 

Legislation to create a covered bonds market in the United States took one step forward on May 3, when a key House subcommittee approved the United States Covered Bond Act of 2011 (H.R. 940) by a voice vote on a bipartisan basis. It now moves to the full House Financial Services Committee. Comparable legislation has not been introduced in the Senate; however, Sen. Charles Schumer (D-NY) has indicated interest in introducing a covered bonds bill.

Some lawmakers have focused on covered bonds, which are heavily used in Europe, as a new source of liquidity for the housing market. NAA/NMHC have expressed support for the measure, but continue to educate lawmakers that while covered bonds could be a supplemental liquidity source, they are unlikely to provide the capacity, flexibility or pricing superiority necessary to adequately replace any of the traditional U.S. sources of multifamily housing mortgage credit.

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