Johnson-Crapo Housing Finance Reform Legislation Advances
- May 19, 2014
Washington, D.C.— The National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) have issued a joint statement from NMHC senior vice president of government affairs Cindy Chetti, hailing the Senate Banking Committee’s passage of housing finance reform legislation (S.1217).
Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) authored the legislation.
“The Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac play a critical role in ensuring the multifamily industry has access to capital in all markets for all project types at all times,” NMHC president Doug Bibby tells MHN.
“Unlike other legislative proposals, the Johnson-Crapo bill retains many of the successful elements of the GSE multifamily programs, all while protecting taxpayers and encouraging more private capital into the marketplace,” he says.
The statement from Chetti reads: “We applaud Senators Johnson and Crapo, as well as the entire Committee, for advancing this critical bipartisan legislation to fix the nation’s housing finance system. Now it’s time for Congress to act.
“Building upon the work of Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.), the proposed legislation lays out critical distinctions between single-family and multifamily financing. Importantly, Title VII retains many of the successful components of the existing multifamily programs and includes key provisions that NMHC/NAA advocated for on behalf of the industry. We look forward to continuing to work with Congress to ensure liquidity in the multifamily mortgage market in order to meet the nation’s growing demand for rental housing.”
The Johnson-Crapo legislation modifies the market structure and government’s role in mortgage finance for both single-family and multifamily, Bibby says. A new regulator/insurance fund steward similar to the Federal Deposit Insurance Corporation (FDIC) would be established, known as the FMIC, for mortgage-backed securities that qualify for a government guarantee.
“While private-sector participants will be responsible for originating, aggregating and securitizing loans, the FMIC will guarantee a portion of the credit risk on securities comprised of loans meeting FMIC standards,” he says.