Fielding more pressure for housing finance reform, ""Sen. Bob Corker"":http://corker.senate.gov/public/ (R-Tennessee) introduced a bill Wednesday that aims to decouple government assistance from the GSEs and shore up private-sector involvement in mortgage markets.
[IMAGE]The bill, titled the ""Residential Mortgage Market and Privatization Act"":http://corker.senate.gov/public/?a=Files.Serve&File_id=3207ad19-86b6-4444-b436-e016483b67fb, proposes gradually reducing the percentage of principal in the GSEs' mortgage-backed securities, streamlining underwriting standards and origination databases, and removing federal guarantees to create a to-be-announced market.
If made into law, the legislation would also do away with the risk-retention rule, replacing it with a 5 percent down-payment requirement.
The goal: Remove the GSEs in their current incarnations and privatize the mortgage market.
""We are no closer to transitioning Fannie Mae and Freddie Mac off government life support than the day the firms were taken under direct government control in 2008,"" Corker said in a statement.
[COLUMN_BREAK]""This legislation gradually reduces the government's footprint in housing finance, brings added transparency to the mortgage market, and fixes many of the market's infrastructure problems that have come to light since the financial crisis of 2008,"" he added.
The bill would start removing the GSEs from federal conservatorship within 180 days of passage by directing Fannie and Freddie to issue guarantees for only 90 percent of each mortgage bond.
A year later, the law would direct the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ to make public any new origination and performance data.
""Edward Pinto"":http://www.aei.org/scholar/100080, a resident fellow with the ""American Enterprise Institute"":http://www.aei.org/home, calls the bill ""a step in the right direction"" in lieu of ongoing proposals to reintroduce the private sector to housing finance.
He and other analysts with the conservative-leaning think tank authored a white paper earlier this year that called for the privatization and deregulation of housing finance.
""Jack Konyk"":http://www.wbsk.com/people.php?PeopleID=64, executive director for government affairs with ""Weiner Brodsky Sidman Kider PC"":http://www.wbsk.com/home.php, answered questions about housing finance privatization in a past interview by delineating the debate as over investors and their interest in securities without federal guarantees.
""Why shouldn't we have a housing finance system that is truly the envy of the world?"" Pinto asks. ""We need a housing finance system that stands on its own.""
The Senate bill is another stab at housing finance reform. It follows earlier efforts, such as one by ""Rep. Scott Garrett"":http://garrett.house.gov/ (R-New Jersey), which proposed eliminating federal funds for the GSEs and overhauling the market.