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House and Senate Focus on GSE Reform

GSE Reform

Chairwoman of the House Financial Services Committee Maxine Waters (D-CA) and Senate Banking Committee Chairman Mike Crapo (R-ID) have identified housing finance reform as a key priority.  

Chairman Crapo released an outline of his vision for housing finance reform on February 1. Senator Crapo has long been a strong voice in trying to advance the topic and came the closest when he, and then Senator Tim Johnson (D-SD), gained bipartisan support for the Housing Finance Reform and Taxpayer Protection Act of 2014. While that bill did not make it out of the Senate, Crapo’s latest bill used parts of his previous effort’s framework for his most recent outline. Key elements of his plan include:  

  • Establishing an explicit government guarantee for securities by using GNMA 
  • Preserving what works well in the current system 
  • Promoting private market involvement including risk sharing 
  • Supporting multiple guarantors 
  • Encouraging housing in underserved and low-income communities through a new Market Access Fund 

The outline provides little insight into the vision for multifamily as the only reference made is to privatize each Enterprises multifamily business. It is too early to tell what that means since it does not specifically address key elements that are important to the industry. 

Additionally, last week the National Association of Realtors released a working paper, A Vision for Enduring Housing Finance Reform, that is their latest vision for housing finance reform. Their key elements of reform include:  

  • An explicit government guarantee at the security level 
  • Preservation of both GSEs but re-charter each to serve a housing mission, establish strong governance and form a publicly regulated utility structure that would manage returns and market expectations   
  • Does not support multiple guarantors 

Much like Senator Crapo’s outline, the NAR’s proposal is silent regarding the multifamily industry, but it contains a number of key elements that can support the sector if included in the proposed reform. Specifically, it includes the explicit government guarantee of securities, preservation that maintains the existing business models and continued risk management framework that served the GSEs well during the financial downturn.  

NAA/NMHC will monitor progress and any actions taken by Congress or the Administration that could impact housing finance.