The Federal Reserve took some pointed criticism on Capitol Hill this week over its handling of monetary policy since the end of the Great Recession, including its support of the housing and mortgage markets through its unprecedented quantitative easing programs. “I don’t think the added gross domestic product growth we’ve had over the last 90 months will be proven to have been worth ballooning the balance sheet from $900 billion to $4.5 trillion,” Rep. French Hill, R-AR, said during a hearing this week by the House Financial Services Subcommittee on Monetary Policy and Trade. He also said...

During a Senate Banking, Housing and Urban Affairs Committee hearing late this week housing finance reform options, there appeared to be a consensus about preserving the parts of Fannie Mae and Freddie Mac that work and providing better access to credit for small lenders. There was also more confidence that GSE reform could be addressed sooner rather than later. Committee Chairman Mike Crapo, R-ID, said the committee is “actively exploring a number of options.” He said recapitalizing and releasing Fannie Mae and Freddie Mac without significant reform is not a solution and added that it’s important to have affordable access to the 30-year fixed-rate mortgage.

Reps. Randy Hultgren, R-IL, and Gwen Moore, D-WI, introduced a bill in favor of captive insurers maintaining their Federal Home Loan Bank membership. Captive insurance lenders that joined the system prior to January 2016 currently have five years to terminate their FHLBank membership. Those that came into the system after that date have one year to exit the system. H.R. 289, the Housing Opportunity Mortgage Expansion (HOME) Act, would allow the five-year captives to maintain their membership, as long as they can demonstrate a commitment to residential mortgage activities. The bill’s sponsors explained that the legislation supports the notion that companies with a history and mission of supporting residential housing should be able to continue to serve their communities.

The Conference of State Bank Supervisors has called for granting community banks relief from the Consumer Financial Protection Bureau’s ability-to-repay rule as well as the reporting requirements under the Home Mortgage Disclosure Act. Testifying before the Senate Banking, Housing and Urban Affairs Committee last week, Charles Cooper, commissioner of the Texas Banking Department and immediate past chairman of CSBS, said the rules limit the ability of smaller financial institutions to engage in residential lending. “Smaller and less complex institutions have reported...

The Mortgage Bankers Association recently submitted a brief to the Supreme Court of the United States in a pending case regarding class-action waivers and arbitration clauses in employment agreements. The MBA and eight state-affiliated MBAs argued that class action waivers are critical for smaller employers such as independent mortgage companies. The Supreme Court has agreed to hear Epic Systems Corp. v. Lewis as part of its term that begins in October. Epic Systems, a health care software company, required certain groups of employees to agree to bring any wage-and-hour claims against the company only through individual arbitration. Circuit courts have issued...

The House Financial Services Committee may take up housing-finance reform after Congress returns from its August recess, according to a key GOP member of the panel. But Rep. Blaine Luetkemeyer, R-MO, who chairs the subcommittee on financial services and consumer credit, told a recent meeting of the Financial Services Roundtable that he doesn’t expect any real movement on housing reform this year. “I wouldn’t expect...

The U.S. House of Representatives was a relatively busy place last week, with a handful of measures related to flood insurance passing the House Financial Services Committee, and a few other, small-scale, individual mortgage reforms being introduced. Among the bills passed by the committee was H.R. 2875, the “National Flood Insurance Program Administrative Reform Act of 2017,” introduced by Rep. Nydia Velazquez, D-NY. It would make certain administrative reforms to the NFIP to increase fairness and accuracy and to protect the taxpayer from program fraud and abuse. The legislation passed on a 58-0 vote. Also favorably voted on was...

House Financial Services Committee Approves Flood Insurance Reform Measures.The House Financial Services Committee this week reported out several bills to reform and reauthorize the National Flood Insurance Program, which is set to expire on Sept. 20, 2017. The bills that passed included H.R. 2875, the National Flood Insurance Program Administrative Reform Act of 2017, which would protect taxpayers from program fraud and abuse; H.R. 1588, the Repeatedly Flooded Communities Preparation Act, which would ensure community accountability for areas frequently damaged by floods; and H.R. 1422, the Flood Insurance Market parity and Modernization Act, which would increase the availability of private flood insurance. The committee also approved H.R. 2246, the Taxpayer Exposure Mitigation Act of 2017, which would shift flood insurance risk for commercial and multifamily properties in ...

Sen. Mark Warner, D-VA, suggested the widespread view that Congress won’t get around to resolving the conservatorships of Fannie Mae and Freddie Mac may be too pessimistic. Speaking at a Mortgage Bankers Association conference in Washington, DC, this week, Warner said, “This may surprise some folks, but I think the stars may align where you could actually see housing-finance reform happen in front of some of the Dodd-Frank reform.” Warner, who co-authored a reform bill four years ago, said...

The Treasury Department last week released a report that called for regulatory reforms aimed to help boost non-agency originations and market share. Many of the reforms relating to the non-agency market could be completed without action from Congress. However, most of them are overseen by the Consumer Financial Protection Bureau, and Treasury’s recommendations appear unlikely to be enacted as long as Richard Cordray is director of the CFPB. Treasury sought input ...