HR Legislation to Privatize and Streamline Mortgage Finance System

Following up on a story we published May 13, the Manufactured Housing Association for Regulatory Reform (MHARR) released a paper entitled “GSE Reform Legislation” documenting how a bill introduced in the House of Representatives would replace government-sponsored enterprises (GSEs) with five government-guaranteed, but ultimately private enterprise entities, and likely be acceptable to both parties.  Sponsored by Rep. Gary Peters (D-Mich.) and John Campbell (R-Calif.), H.R.1859 would continue to support the fixed-rate 30-year mortgage that allows middle-class borrowers to attain home ownership.  Noting $150 billion will be needed to rescue Fannie Mae and Freddie Mac, the legislation would end bailouts, require lenders to keep a healthy capital reserve, as well as contribute to a catastrophic reinsurance fund.  Rep. Peters said,The status quo is unacceptable, but eliminating any government role in the mortgage market would undermine the fragile housing recovery and essentially eliminate the 30-year fixed rate mortgage.”

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