With housing-finance reform gaining momentum, the Milken Institute said bringing it over the finish line requires policymakers to address the technical issues in the proposed multiple-guarantor model or one based on private insurance. Failing to address those issues would leave the housing-finance system in worse shape than keeping Fannie Mae and Freddie Mac in conservatorship, the organization said in a new analysis. The multiple-guarantor model suggests attracting new guarantors to promote competition in the market and end the GSE duopoly. But the authors of the paper, which include Erik Kaplan, Michael Stegman, Phillip Swagel and Ted Tozer, said that’s a two-fold challenge that includes determining how to provide space for new guarantors to enter the...

GSE shareholders rights group Investors Unite took issue with a recent op/ed that suggested the Trump administration is preparing to return to the same housing-finance market that purportedly caused the financial crisis. In a piece penned for the Wall Street Journal, the American Enterprise Institute’s Peter Wallison warned that the Treasury Department is going down the wrong road on GSE reform. However, IU said Wallison's fears that the Federal Housing Finance Agency and Treasury are “marching back to the 1930’s” are unfounded. The group said in a blog posting that conservatives like Wallison will always claim that “statist prescriptions to economic questions are inevitably doomed to failure and almost always make matters worse.”

The Community Home Lenders Association wants to make sure that small lender protections like preserving the cash window and limiting the number of guarantors in the market are included in GSE reform legislation. Late last week, the trade group sent a letter to the Senate Committee on Banking, Housing and Urban Affairs about the importance of access for small lenders. “Fannie and Freddie must be preserved and recapitalized, pursuant to a utility model, with the capability to serve the entire small-lender market on fully competitive terms,” the letter said. CHLA said a utility model would work best for small lenders because it ensures their primary role of facilitating loan securitizations.

Ginnie Mae would become the linchpin of the conventional secondary mortgage market of the future, providing an explicit government guarantee for MBS issued by one of several new entities, under a plan being drafted by Senate Republicans.

Housing finance reform – including a potential liquidation of Fannie Mae and Freddie Mac – is moving along in the Senate with one major hurdle looming in the background: Democrats, for the most part, don’t want anything to do with it.

The Department of Justice has directed its prosecutors to seriously consider dismissing meritless False Claims Act complaints from whistleblowers if they do not serve the government’s interests and help defendants, including mortgage lenders, avoid lengthy and costly frivolous lawsuits.

Treasury Secretary Steven Mnuchin told members of the Senate Committee on Banking, Housing and Urban Affairs this week that he’s committed to housing-finance reform, wants to maintain the 30-year fixed-rate mortgage and get more private capital back into the housing market.

President Trump this week signed a short-term spending bill that would keep the government operating until Feb. 8, 2018. The bill ended a three-day shutdown after the previous spending authority for most of the government expired at midnight on Jan. 19. However, the threat of another shutdown looms. FHA and Ginnie Mae both had contingency plans in place in case the short-lived shutdown dragged on, as it had in 2013. That event lasted for 16 days, at a loss of $1.6 billion a day to the federal government. Under FHA’s emergency plan, the agency would continue to endorse new single-family forward mortgages, but not Home Equity Conversion Mortgages and Title I loans. Ginnie would reduce staffing to essential personnel but continue its secondary market operations. It would continue to remit timely payment of principal and interest to investors, grant commitment authority and support issuance of ...

Legislation that would define loans held in portfolio by smaller banks as qualified mortgages garnered unanimous support at a markup in the House Financial Services Committee last week. H.R. 2226, the Portfolio Lending and Mortgage Access Act, was approved on a 55-0 vote. The bill has been kicking around in Congress for years and was modified at the markup to help win support in the Senate. Rep. Andy Barr, R-KY, introduced the legislation. He said it will “expand access to ...

The Senate Banking, Housing and Urban Affairs Committee this week continued to work on housing-finance reform legislation, with the hope that a bipartisan bill can still be cobbled together in a dysfunctional Congress. As for passage this year, that’s a different matter.