Last week the House Financial Services Committee held a hearing on the Protecting American Taxpayers and Homeowners (PATH) Act discussion draft, introduced by Chairman Hensarling (R-TX). The comprehensive discussion draft includes reforms to FHA, the GSEs, and the financial regulatory law known as the Dodd-Frank Act.
NAR opposes this legislation based on two major concerns: 1) We strongly oppose the end of federal guarantee for a secondary mortgage market; and 2) we strongly oppose the dramatic restructuring and targeting of FHA.
The draft would wind down Freddie Mac and Fannie Mae over a five-year period. It would create a new Utility to promote the securitization of mortgages. However, the draft does not provide for a federal guarantee for the Utility.
The draft also contains significant changes to the FHA program that include income targeting, downpayment increases, and loan limit decreases. We cannot support this draft without a federal guarantee and a removal of the FHA Title.
The bill does include some positive changes including language to fix the definition of fees and points in the ability to repay/qualified mortgage (QM) regulation so that consumers have more options when choosing a lender, and language related to mortgages seized under eminent domain.
NAR submitted a written statement for the hearing, opposing the discussion draft. This draft is moving quickly, and the Committee intends to mark-up the bill this week. NAR will continue to work with the Committee and Congress to oppose this legislation.