Take A Giant Step: The New Fair Deal Banking And Housing Stability Act of 2013

Confounded Interest ^ | 11/25/2013 | Anthony B. Sanders

[whitedog57]

There are a plethora of housing finance bills being written or circulating. These include the deeply flawed Corker-Warner bill, the Crapo-Johnson bill (that I have not seen), the PATH Act from the House. Now we have another House GSE reform bill, The New Fair Deal Banking And Housing Stability Act of 2013, from Representatives Justin Amash (sponsor), Jeff Duncan, Jim Jordan, Doug Lamborn, Tom McClintock, Mark Meadows, Tom Price and Matt Salmon.

The New Fair Deal Banking and Housing Stability Act of 2013 takes decisive action to end the cycle of booms and busts, of bad behavior and bailouts: - Gradually phases out agencies that promote risky lending: Fannie Mae, Freddie Mac, the Federal Housing Administration, and Ginnie Mae. - Ends regulations that promote risky lending: the Community Reinvestment Act, the Home Mortgage Disclosure Act, several provisions of the Dodd-Frank Act, the GSEs’ Affordable Housing Goals, and a few powers of the Federal Home Loan Banks. - Repeals subsidies to state and local governments for restrictive land use policies. - Repeals provisions that were used for financial sector bailouts. - Replaces risk-weighted capital standards with a simple rule and gradually increases required capital levels. - Limits FDIC deposit insurance to $150,000 per account per person per institution. - Instructs committees of jurisdiction to write legislation

113-Amash-NFDBHSA-OnePager-AgencyAction.

The Amash bill takes a giant step towards getting the government out of the mortgage market. Particularly is closing down the previously untouchable FHA.

Fannie Mae/Freddie Mac: phase out (5 years). - Immediately repeal certain Dodd-Frank mortgage regulations and subsidies for risky borrowing, limit Fannie/Freddie to buying and securitizing owner-occupied fixed-rate mortgages. - Gradually increase capital standards and reduce portfolios for Fannie/Freddie; increase down payments and reduce maximum loan size for mortgages they can buy. - In five years, Fannie/Freddie enter Federal Housing Finance Agency receivership: sell off remaining assets to pay off debts.

Ginnie Mae:phase out (5 years): cap and reduce monthly guarantees of mortgage-backed securities.

Federal Home Loan Banks: immediately repeal provisions promoting risky lending.

Federal Housing Administration:phase out (5 years). - Immediately require banks to repurchase mortgages that become 30 days delinquent within first six months, stop insuring cash-out refinancing, limit seller concessions to 3%. - Gradually reduce maximum loan size lim its like Fannie/Freddie, increase down payments, and reduce percentage of each mortgage insured by the government. - In five years, repeal FHA program authorities.

This is indeed a giant step towards shrinking the government’s enormous footprint on the economy and mortgage market.

[whitedog57]

It will never pass in Mordor on the Potomac, but at least some are trying.

[taxcontrol]

Also needs to repeal the Comunity Reinvestment Act which is the root source for all of these housing manipulations.