Many in the housing industry view the Bush proposal as a calculated attempt to divert capital from housing to other sectors of the economy. Certainly, it sends the unsettling message that for this Administration, housing is no longer a national priority.
The Administration wants the Congress to act quickly on legislation that will turn its proposal into a reality. Hearings on Capitol Hill are already well underway, and a vote in Congress could be only weeks away. At stake could be the innovation and creativity in mortgage programs that provide housing opportunity in this country.
If that sounds far-fetched, then consider where working families would be today if decisions about housing finance programs had been in the hands of the Treasury, an agency that is more concerned about bank reserves and how much income taxes people pay.
Fannie Mae and Freddie Mac have created an American success story: a finance system for housing that has contributed to the availability and affordability of housing credit and expanded affordable housing programs and products. These two indispensable secondary market institutions have reduced mortgage interest rates, linked mortgage finance to the national and international capital markets, eliminated regional disparities in interest rates, cushioned local economic downturns, expanded homeownership and rental housing opportunities and brought standardization and innovation to the mortgage markets.
Fannie Mae and Freddie Mac have provided support to primary market lenders for the development of hybrid mortgages that combine the benefits of adjustable and fixed-rate loans; lower downpayment requirements; and new mortgage products for borrowers with tarnished credit histories. And they have been at the forefront of technological innovations to streamline the mortgage process to reduce the time and cost involved in obtaining a mortgage.
At a time when the nation faces further challenges to provide affordably priced housing for its working families, this Administration ought to be encouraging HUD to build upon its foundation of achievement in its oversight of Fannie Mae and Freddie Mac. At a time when housing has bolstered consumer spending and propped up a fragile economy, this Congress should be doing everything it can to ensure that the housing industry remains strong.
Subverting a system that has worked so well and that holds such great promise for the future could have catastrophic consequences for housing and the economy. The Bush Administration has sent Congress a prescription for disaster. It is now incumbent upon our legislators to reject this proposal and seek a regulatory solution for the oversight of housing’s government sponsored enterprises that will reaffirm our national commitment to housing.
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