Senate Banking Chair Releases Housing Financial Reform Legislation Outline

Senate Banking Committee Chairman Sen. Mike Crapo (R-ID) Friday released an outline for housing finance reform legislation. The outline incorporates elements of many plans and principles for housing finance reform legislation that have been discussed by legislators, analysts, stakeholders and thought leaders. 

“We must expeditiously fix our flawed housing finance system,” said Chairman Crapo. “My priorities are to establish stronger levels of taxpayer protection, preserve the 30-year fixed rate mortgage, increase competition among mortgage guarantors, and promote access to affordable housing. I invite my Senate and House colleagues, the Administration and all interested stakeholders to work together to enact this critically needed reform.”

Chairman Crapo’s proposal would create a permanent, sustainable new housing finance system that:

  • Reduces the systemic, too-big-to-fail risk posed by the current duopoly of mortgage guarantors;
  • Preserves existing infrastructure in the housing finance system that works well, while significantly increasing the role of private risk-bearing capital;
  • Establishes several new layers of protection between mortgage credit risk and taxpayers;
  • Ensures a level playing field for originators of all sizes and types, while also locking in uniform, responsible underwriting standards; and
  • Promotes broad accessibility to mortgage credit, including in underserved markets

CUNA Chief Advocacy Officer Ryan Donovan thanked Chairman Crapo for his initiative.

“America’s credit unions play an increasingly vital role in the housing finance marketplace and depend upon the secondary market to provide liquidity for mortgage credit. We applaud Chairman Crapo for his initiative in proposing a legislative solution to one of the most important, unresolved issues remaining from the financial crisis—reforming the secondary mortgage market. Credit unions look forward to engaging with both the Chairman and the Senate Banking Committee as this outline continues to develop into legislation and CUNA is committed to working to ensure that the secondary market of the future includes equal and fair access to credit unions,” Donovan said.

CUNA and the state leagues have consistently supported the creation of an efficient, effective and fair secondary market with equal access for lenders of all sizes.