Congressman Al Green (TX-9), a member of the House Financial Services Committee voted in favor of HR 1461, the Federal Housing Finance Reform Act, which changes the oversight structure of Government Sponsored Enterprises (GSEs). The bill received overwhelming support from the committee, passing by a vote of 65 to 5.

“GSEs are critical components of the nation’s housing finance system. While not perfect, this bill represents a critical first step towards addressing the affordable housing shortage facing our cities and communities all over this country,” Green said. GSE’s have recently come under fire as a result of admitted accounting irregularities. Fannie Mae, Freddie Mac and two of the Federal Home Loan Banks have completely reorganized their management structures in an effort to improve corporate governance.

HR 1461 establishes the Federal Housing Finance Agency to serve as an independent regulatory agency which has direct oversight of GSE operations. The agency will be responsible for ensuring the future safety and soundness of their operations. The bill would also strengthen affordable housing missions of GSEs by expanding opportunities for homeownership and rental housing. According to the Joint Center for Housing Studies, fewer than half of all African American (48.4%) and Hispanic (47.4%) households owned their homes in 2003, compared to three-quarters of non-minority households.

With millions of families on the brink of poverty and thousands more only one pay check away, Green added, “Homeownership represents one of the best opportunities for minority households to build family wealth and economic security. In the past decade, we have seen housing cost more than triple, leaving millions of families without adequate housing and in many cases homeless. I am pleased that this committee is not missing in action but has recognized the crisis and has acted.”

Despite its passage, Congressman Green remains concerned about the “Bright Light Test” provision maintained in the bill that may curtail GSEs’ ability to effectively engage in anti-predatory lending initiatives and homeownership counseling initiatives. The provision could also hinder GSEs underwriting systems, which have decreased intentional discrimination on minority homebuyers and kept smaller lenders institutions competitive with larger.

Green continued, “Curtailing GSE innovation at this time would be detrimental to minority homeownership rates. I hope we will be able to address this concern prior to the bill being considered by the full House.”

Green also lauded the leadership on both sides of the aisle for working together to build a consensus that better serves the American families.

The bill establishes the Affordable Housing Fund requiring both Freddie Mac and Fannie Mae to allocate 5% of their after tax earnings, respectively, into this Fund. The Fund will be used for the production, preservation and rehabilitation of rental and available housing. “I am pleased that these funds will help more families realize the American dream of homeownership,” said Green.