Fannie Mae and Freddie Mac cannot remain safely in conservatorship indefinitely, and they cannot get out from under Uncle Sam’s protection without “cataclysmic” consequences to the government-sponsored enterprises, MBS investors and the market, according to a new Urban Institute study. While the Federal Housing Finance Agency and the White House can make minor changes administratively, the UI paper notes it would take an act of Congress to authorize substantial revisions to the GSEs’ bailout agreement. “They can take...

With housing finance reform legislation effectively stalled just short of a Senate floor vote, the industry is beginning to shift its expectant gaze to the Federal Housing Finance Agency to take the initiative as the debate moves toward GSE preservation. Although the reform bill, S. 1217, by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, cleared the Senate Banking, Housing and Urban Affairs Committee earlier this month, its less than impressive 13-9 vote margin all but ensures that Senate leadership will ignore the measure’s bid for a floor vote through the remainder of the 113th Congress.

Look for the various lawsuits filed by private owners of Fannie Mae and Freddie Mac stock against the federal government to take a “very long time to be decided,” as the courts may take up to a year to resolve just the introductory motions, according to a legal expert. Beyond that, the litigation over shares in the two government-sponsored enterprises could stretch out to the U.S. Supreme Court. Brooklyn Law School Professor David Reiss, speaking during a Bloomberg Industries webinar last week, noted that lawsuits stemming from the savings and loan debacle of 20 years ago give a sense of the possible timeframe, but litigation brought by disenfranchised Fannie and Freddie investors against the government offers an entirely different and deeper set of legal complexities. “These are...

A lack of overwhelming support in the Senate for legislation to reform the government-sponsored enterprises has shifted the housing finance policy debate from reform to preservation. If Congress fails to act, the Federal Housing Finance Agency is set to drive mortgage policy for years to come. Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, initially delayed the Senate Committee on Banking, Housing, and Urban Affairs’ recent markup of S. 1217, the Housing Finance Reform and Taxpayer Protection Act, in an effort to increase support for the GSE reform bill. But they failed to gain favor with a number of liberal members of the committee, and the bill ultimately passed on a 13-9 vote seen as dooming prospects for comprehensive action on GSE reform in Congress. Sens. Chuck Schumer, D-NY, and Elizabeth Warren, D-MA, were...

Two trade groups expressed their support for the nomination of Department of Housing and Urban Development Secretary Shaun Donovan to be the director of the Office of Management and Budget and Julian Castro as his successor at HUD. The Mortgage Bankers Association praised Donovan for his work on critical initiatives, such as housing revitalization, recovery efforts related to Hurricane Sandy, borrower assistance programs and the HUD/FHA budget. Donovan would replace Sylvia Mathews Burwell, currently the director of OMB, who was chosen to replace Health and Human Services Secretary Kathleen Sebelius. Both the MBA and the National Association of Realtors praised...

Legislation to reform the government-sponsored enterprises moved forward in the Senate last week, but industry analysts suggest that complete action by Congress to reform the housing finance system is unlikely until 2017 at the earliest. The Senate Committee on Banking, Housing and Urban Affairs approved S. 1217, the Housing Finance Reform and Taxpayer Protection Act, on a 13-9 vote. The bill pushed by the committee’s leaders, Sens. Tim Johnson, D-SD, and ...

Last week, the Republican-controlled House Financial Services Financial Institutions and Consumer Credit Subcommittee considered nearly a dozen pieces of legislation to rein in the CFPB, provide lenders with some regulatory relief, and bring greater transparency and accountability to the agency. Most Democrats on the committee and some consumer advocate groups were either skeptical or outright opposed to the measures, fearing each of the bills would weaken or eviscerate the agency – or result in “death by a thousand paper cuts,” as Rep. Carol Maloney, D-NY, put it. Meanwhile, Republicans and lender groups supported the collection of bills brought before the subcommittee as corrections to a flawed Dodd-Frank Wall Street Reform and Consumer Protection Act that need to be enacted before bad...

House Financial Services Committee Formally Passes More CFPB Legislation. The House Financial Services Committee took final votes on some potentially significant CFPB-related measures. H.R. 1779, the Preserving Access to Manufactured Housing Act of 2013, introduced by Rep. Stephen Fincher, R-TN, was approved by voice vote. H.R. 4521, the Community Institution Mortgage Relief Act of 2014, introduced by Rep. Blaine Luetkemeyer, R-MO, was approved 43-16. H.R. 4466, the Financial Regulatory Clarity Act of 2014, introduced by Rep. Shelley Moore Capito, R-WV, was approved 34-25. H.R. 2673, the Portfolio Lending and Mortgage Access Act, introduced by Rep. Andy Barr, R-KY, was approved 36-23. H.R. 3211, the Mortgage Choice Act of 2013, introduced by Rep. Bill Huizenga, R-MI, was passed by voice vote ...

Housing-finance reform legislation is stalled for the remainder of this year and perhaps throughout the next congress after last week’s majority vote by the Senate Banking, Housing and Urban Affairs Committee to approve the bill, say industry observers. The committee voted 13 to 9 to report out a revised version of S. 1217, the Housing Finance Reform and Taxpayer Protection Act, just one vote more than the minimum to advance the bill for floor vote consideration. The committee approval likely marks...

The Senate Banking, Housing and Urban Affairs Committee voted 13-to-9 to report out a revised version of the controversial housing-finance reform legislation, but the bill’s tweaks weren’t enough to win the support of the panel’s liberal Democrat members. Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, released their initial draft in March, which built upon the bill submitted last year by Sens. Bob Corker, R-TN, and Mark Warner, D-VA. Though the Housing Finance Reform and Taxpayer Protection Act of 2013, S. 1217, cleared committee with one more than the minimum 12 votes required, an affirmative vote of at least 16 of the 22 members of the panel had been seen...