A Responsible Path Forward on GSE Reform

Which of the recommendations in the BPC Housing Commission’s report should receive highest priority?

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As a professional is the field of federal housing policy for nearly 40 years, I wish to commend the Bipartisan Policy Center (BPC) Housing Commission for crafting a package of realistic and actionable policy recommendations that respond to both the near-term and long-term challenges facing the housing sector. While the comprehensive report touches on major sectors of our federal housing framework, I believe the future of housing finance should receive the highest priority.

True to its stated goal, the Commission’s report is a very responsible effort to jump-start more serious discussions over the future of the nation’s home mortgage market.

BPC’s proposed model of a Public Guarantor, wholly owned by the government, is similar to NAR’s recommendation housed in the document “NAR’s Principles for Restructuring the Secondary Mortgage Market” released February 16, 2011. As with all recommendations to alter/reform the secondary mortgage market the devil is in the details. NAR’s primary concern with any model that is put-in-place, even the one that we propose, is ensuring that long-term, fixed rate mortgage products are affordable and available to qualified creditworthy consumers. Fostering a system that significantly constricts the availability of mortgage capital to those households interested in, and able to, sustain homeownership dampens the appeal of one portion of the American Dream – the dream of owning a piece of our great society.

Recent legislation and discussions favor a more comprehensive reform strategy, and not the piecemeal approach we saw in the past. Additionally, the Federal Housing Finance Agency (FHFA) continues to develop a new single securitization infrastructure. This infrastructure is being developed as part of a strategic plan by FHFA, which also recently announced plans to formally create a new, distinct entity, which would effectively serve as a utility for the secondary mortgage market.

I believe that the work underway at FHFA and the release of the BPC Housing Commission report have spurred Congress to re-prioritize the need for GSE reform. In fact, just last week Senators Corker, Vitter, Warren, and Warner introduced a bill that would prohibit the use of the GSEs’ guarantee fees (g-fees) for any purpose other than maintaining the safety and soundness of the enterprises. This positive effort, along with the forthcoming slate of hearings on the GSEs in the House Financial Services Committee is the impetus for substantial GSE reform discussions.

My work at NAR over the past 5 years has been to advocate at the regulatory level for prudent and sustainable lending rules. A sound housing policy and the availability of mortgage credit is essential for our nation’s sustainable economic recovery and long-term growth, and the Commission’s report reflects many of the same principles that guided NAR’s thinking.

Joseph M. Ventrone is vice president of the National Association of Realtors’ Regulatory and Industry Relations Department.

Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic. Guest posts will feature prominently on BPC’s website, as well as be shared regularly with Housing Commissioners to help inform their work.

Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector.

Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.