Discussion focused on Carney’s housing finance reform legislation

 

WILMINGTON, Del. – Congressman John Carney (D-DE), a member of the House Financial Services Committee, participated in a roundtable discussion on Monday at Village of Eastlake with leaders from Delaware’s housing and banking communities.  The discussion focused on a proposal put forward by Congressman Carney to improve the housing finance market while preserving the 30-year fixed mortgage.  Congressman Carney was joined by Ted Tozer, President, Government National Mortgage Association (Ginnie Mae); Glenn Brooks, Senior Vice President of Leon N. Weiner and Associates; and Winthrop Watson, President and CEO of FHLBank Pittsburgh.

 

“Today, nearly 90% of all mortgages are completely backed by the federal government. Absent reform of our housing system, the United States housing sector will effectively remain nationalized,” said Congressman Carney, a member of the House Financial Services Committee. “This result would be bad for both homeowners and taxpayers. The proposal I’ve developed along with Congressmen Delaney and Himes would attract significant private capital back to the market while maintaining access and affordability to quality housing opportunities for hard-working American families.”

 

“My priority in developing this proposal is to preserve the thirty-year fixed rate mortgage while protecting taxpayer dollars. Getting this effort right is critical to the success of our economy.  Without a smart, sensible solution, affording a home will become more expensive for families across the country, and taxpayers will remain on the hook in the event of another downturn in the housing market.  There are a lot of good ideas out there -- I think this one strikes the right balance between public and private sector involvement in the housing market.”

 

Congressman Carney’s housing finance proposal reforms the current housing finance market by creating a structure that enables the government to significantly expand the availability of capital in the market.  The plan adds discipline to the mortgage market, creates meaningful paths and incentives for private capital to flow into the mortgage market, and ensures that the mortgage market benefits from the liquidity and security provided by government participation.

 

The proposal creates a unique public-private partnership where private “first loss” capital of up to 5% is required in all mortgage securitizations, and the government – acting through Ginnie Mae – in partnership with private capital will provide reinsurance of up to 95% of any mortgage securitization. Specifically, Ginnie Mae will provide reinsurance and prospectively contract with private reinsurance companies to share in the government’s reinsurance policy. Both the private reinsurance carrier and the government will receive the exact same pricing and bear the exact same risk. 

 

Winthrop Watson, President and CEO of FHLBank Pittsburgh, welcomed the addition of Congressman Carney's ideas to the ongoing discussion of housing finance reform.

 

“Congressman Carney should be applauded for the development of very thoughtful legislation to reform the nation’s mortgage finance infrastructure. I hope it receives full consideration as Congress moves forward on this matter which is so important to all Delawareans.”

 

Congressman Carney partnered with Representatives John K. Delaney (MD-6) and Jim Himes (CT-4) to draft the reforms, and the group plans to introduce legislation this spring.  

 

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