RISMEDIA, July 16, 2008-With Fannie and Freddie’s financial troubles sending shockwaves through the country, leaders in the industry have stepped up to the plate, offering their take on what the latest developments mean for those effected most-the consumers.
“The National Association of Realtors® welcomes the strong response this weekend by the Treasury Department and the Federal Reserve Board in response to the market turmoil and apparent overreactions that began last week affecting Fannie Mae and Freddie Mac,” said National Association of Realtors® President Richard F. Gaylord. “The health of the American economy depends on Fannie Mae and Freddie Mac and the steps taken by the U.S. government make clear that the role of Fannie and Freddie, in making fair and affordable mortgage loans available for home owners and home buyers, must not and cannot be interrupted.
“We support the federal government’s actions and authorization to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in the financial markets. Fannie and Freddie play a central role in our housing finance system, and we agree that they must continue to do so as we work through the current housing correction,” he said.
Speaker Nancy Pelosi also commented on the Bush Administration’s proposals on Fannie Mae and Freddie Mac.
“Fannie Mae and Freddie Mac have historically played a vital role in the supply of home mortgages for lower- and middle-income Americans, and particularly in the current economic downturn,” she said in a statement. “This weekend, Treasury Secretary Henry Paulson proposed additional measures to restore confidence in the strength of Fannie Mae and Freddie Mac, which we must do. It is essential that this legislation become the law of the land.
“Under the leadership of Chairman Barney Frank, in April 2007 and in May of this year, the House passed significant reform of Fannie Mae and Freddie Mac as part of comprehensive housing legislation that helps homeowners and renters and stabilizes the housing market. With Chairman Frank and Chairman Charlie Rangel again leading the way, Congress will soon pass comprehensive housing legislation that will include the Administration’s proposals on Fannie Mae and Freddie Mac and provide additional affordable mortgage loan options, offer new refinancing opportunities for families at risk of foreclosure, increase the nation’s stock of affordable rental housing, and expand homeownership opportunities for veterans living in high-cost areas.
“The legislation also strengthens and streamlines the low-income housing tax credit, ensuring that even more hardworking Americans will be able to access affordable housing,” she said.
What’s more, the Federal Reserve’s Board of Governors approved the Board’s final rules under the Home Ownership and Equity Protection Act (HOEPA). The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction.
Kieran P. Quinn, CMB, chairman of the Mortgage Bankers said, “These rules are a thoughtful effort to tackle difficult concerns and attempt to balance the need for new standards against the need for available, relatively low cost mortgage credit. MBA is carefully reviewing aspects of the rules including the new standards for determining which loans are treated as subprime thus demanding further protection. MBA strongly believes that it is essential for credit not to be unduly restricted.
“Notably the Board withdrew, for further consideration, its proposal to improve disclosure of mortgage broker compensation. We encourage the Board to work with the Department of Housing and Urban Development (HUD), which has also been working on this issue, so that the Government’s approach to this problem is coordinated in order to better protect American consumers.”
In other housing news, NAR announced their pledge to support finalizing the housing stimulus bill. The U.S. Senate has passed a bipartisan housing stimulus bill that “is a big step toward helping people buy and keep their homes,” said National Association of Realtors® President Dick Gaylord. The Senate action moves a housing stimulus package closer to law, which would help bring stability to the housing market and stop the rising rate of foreclosures.
“We are eager for the House and Senate to come together to finalize an aggressive bill that will ensure that every American who can afford to own a home and wants to do so will have the opportunity, and that every American who responsibly owns a home is able to keep it,” said Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif.
NAR has expressed ongoing support for many of the provisions in the legislation, including Federal Housing Administration Modernization that will simplify and make FHA-backed mortgages more available, a tax credit for first-time home buyers, reform of government-sponsored enterprises Fannie Mae and Freddie Mac, permanent increases to both GSE and FHA loan limits, and a program to expand FHA that would allow more mortgages to be refinanced.
“The tax credit for first-time home buyers would be a strong stimulus to a weak housing market, and FHA stabilization should help thousands of families refinance existing mortgages and in many cases keep their homes,” said Gaylord.