North Carolina banking and mortgage industry leaders are voicing their support for a bill that would wind down mortgage giants Fannie Mae and Freddie Mac over the next five years and replace them with a new government agency to guarantee loans.
The plan is part of legislation co-sponsored by Sen. Kay Hagan, a North Carolina Democrat. Her office said Monday that the bill has the support of the states banking, credit union and realtor associations, as well as the National Association of Home Builders.
The legislation comes as the housing finance system remains in flux. Fannie and Freddie, which own or guarantee about half of the nations mortgages, have been under the control of the federal government since the financial crisis.
The debate over their future has had renewed vigor since U.S. Rep. Mel Watt, a Charlotte Democrat, was nominated by President Barack Obama in May to head the agency overseeing the two. Watt is scheduled for a confirmation vote on the Senate Banking Committee this week.
Eight of Hagans colleagues on the banking committee are also pushing this bill, five Republicans and three Democrats including Republican Sen. Bob Corker of Tennessee and Democratic Sen. Mark Warner of Virginia.
For too long, Congress has ignored our broken housing finance system, Hagan said in a statement. This bipartisan bill provides an important roadmap for strengthening our housing finance system and protecting taxpayers while ensuring access to affordable, long-term mortgages for consumers.
The bill would immediately begin to wind down Fannie and Freddie and set up a new Federal Mortgage Insurance Corporation modeled after the Federal Deposit Insurance Corp. that protects bank accounts.
The corporation would collect premiums, and issue mortgage-backed securities. Private investors would bear the first 10 percent of losses, which Hagans office said would cover all the losses Fannie and Freddie suffered in the financial crisis twice over.
After eight years, Congress would study whether a fully privatized system was possible.
Industry leaders call the bill a step in the right direction.
Thad Woodard, CEO of the North Carolina Bankers Association, called the bill a solid start in a statement. John Radebaugh, President, North Carolina Credit Union League, said essentially the same.
This comprehensive reform legislation would enable the market to continue to provide long-term, fixed rate mortgage products that most consumers seek and trust, Patrice Willetts, president of the North Carolina Association of Realtors, said in a statement. This bipartisan legislation will accelerate the conversation necessary to reform our housing finance system.
Dunn: 704-358-5235 Twitter: @andrew_dunn
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