WASHINGTON – July 8, 2011 – The National Association of Realtors® (NAR) announced support yesterday for plan to reorganize the secondary mortgage market, which includes Fannie Mae and Freddie Mac. The secondary market buys loans originated by local lenders, which frees cash for the local lenders and allows them to make more mortgage loans.
“An efficient and affordable restructured mortgage finance system (including Fannie Mae and Freddie Mac) is in the best interest of taxpayers,” says NAR President Ron Phipps. “And to accomplish that, Congress must enact comprehensive housing finance reform legislation.”
H.R. 2413, the “Secondary Market Facility for Residential Mortgage Act of 2011,” was introduced yesterday by Reps. Gary Miller (R-Calif.) and Carolyn McCarthy (D-N.Y.). Rather than privatizing the functions now performed by Fannie Mae and Freddie Mac, the bill keeps the federal government involved.
NAR says it wants to make sure that mortgage money continues to flow to buyers, and it sees H.R. 2413 as offering the best solution for the industry.
“While the return of private lenders is necessary for a healthy market, having only private capital as the sole source of housing finance could severely restrict mortgage capital and result in a system that is dominated by a few large banks that are ‘too-big-to-fail’,” NAR says in a release.
“We strongly support the efforts of Reps. Miller and McCarthy,” says Phipps. “Continuing government participation and … liquidity … will help ensure that qualified homebuyers can obtain safe and sound mortgage financing products even during market downturns, when private entities have historically pulled back.”
H.R. 2413 would create a secondary-mortgage-market entity that has no shareholders. It’s only job would be promoting and protecting the flow of mortgage money during all market conditions.
“Other hybrid proposals (to reform Fannie Mae and Freddie Mac) with private profits and government guarantees would only replicate the same incentive structure and mistakes of Fannie Mae and Freddie Mac before the government takeover,” says Phipps.
A five-member Board of Directors appointed by the president for five-year terms would run the new facility. No more than three board members would be affiliated with the same political party.
“Realtors thank Reps. Miller and McCarthy for their dedication and work on this bill, and we look forward to working with Congress to ensure that comprehensive and effective housing finance reform legislation is enacted,” Phipps said. “We must do this to preserve and strengthen the American dream for future generations.”
© 2011 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.