Number 3, release of a comprehensive framework for housing finance reform and active discussions with lawmakers:
Because our members’ businesses depend upon the existence of an accessible and reliable housing finance system, NAHB has been deeply engaged in policymakers’ conversations about how best to reform the system, wind down Fannie Mae and Freddie Mac, and ensure a stable supply of credit for both home buyers and rental housing. NAHB made a major contribution to this debate with the recent release of a comprehensive framework for housing finance reform that includes our specific recommendations.
Developed through a specially appointed NAHB working group and approved by NAHB's Board of Directors in Orlando, this plan stresses that any transition away from the current housing finance system must be done in a careful and deliberate manner to avoid further disruptions to an already fragile market. It is also built upon the recognition that, as the private market assumes a greater role in the marketplace, it is vital to maintain an appropriate level of government support to preserve financial stability, promote investor confidence and ensure liquidity/stability for homeownership and rental housing. In keeping with these core directives, NAHB's plan seeks to:
- Include private, federal and state sources of housing capital.
- Offer a reasonable menu of sound mortgage products for both single-family and multifamily housing that is governed by prudent underwriting standards and adequate oversight and regulation.
- Transition Fannie Mae and Freddie Mac to a new mortgage securitization system for single-family and multifamily conventional mortgages.
- Consider the 12 regional Federal Home Loan Banks for this securitization role.
- Phase in the new system over time and allow Fannie and Freddie to remain operational until the alternative system is fully functioning.
- Provide a federal backstop to ensure that conventional 30-year home loans and adjustable rate mortgages are available at reasonable interest rates and terms.
- Structure the federal support to the conventional mortgage market through a privately funded insurance fund similar to the FDIC’s backing of the fund that insures savings deposits. This will allow the government to be the insurer of last resort in order to reduce the risk to taxpayers.
- Continue role of federal housing agencies (HUD, FHA, VA, USDA, Ginnie Mae).
- Expand the role of the Federal Home Loan Banks in the housing finance system.
- Restart a carefully regulated fully private mortgage-backed securities market through reforms to the securities ratings system to remove conflicts of interest.
- Repair other flaws that produced the housing boom and bust by closing the gaps in standards and oversight that allowed and facilitated the improper and illegal activities in financial and mortgage markets.