Gary Peters Leads Fight to Protect Homeownership
Wall Street Journal: Analysts say Bipartisan Bill is “Only Plan Likely to Attract Sufficient Support from Both Parties”
Royal Oak, MI – June 14, 2011 – (RealEstateRama) — For more than a generation, millions of American families have been able to purchase their own homes thanks to the availability of the thirty-year, fixed rate mortgage. But in the aftermath of the housing collapse and the financial crisis, the thirty-year mortgage is in danger of disappearing altogether as banks and government regulators consider making major reforms to the housing market.
However a bipartisan plan from Representative Gary Peters may have the answer – and the proposal is already picking up strong support in Washington, DC and here in Michigan.
The bipartisan bill (H.R. 1859) introduced by Representative Gary Peters and Representative John Campbell (R-CA) would reform the mortgage market, putting an end to taxpayer-funded bailouts while preserving access to affordable mortgages for middle class families.
“Homeownership is part of the American dream, and we need to keep that dream alive for middle class families here in Michigan and around the country,” said Rep. Gary Peters. “Fannie and Freddie need to go, and we need to put an end to taxpayer-funded bailouts, but we need a responsible, bipartisan solution so that qualified borrowers can still get affordable mortgages, and that’s what this bill will do.”
Peters’ bill would wind down the government-sponsored mortgage giants, Fannie Mae and Freddie Mac, and create a new system of privately-financed organizations to support the mortgage market.
Unlike the current system, in which taxpayers are on the hook for over $160 billion to bailout Fannie and Freddie as a result of risky investments, the new organizations would be required to use private funding – including a privately-financed insurance fund – to protect against losses. While the organizations would still be able to purchase a limited government guarantee as a last resort, the guarantee would only apply to the investments – not the organizations themselves – so an entity that makes bad decisions and gets in to trouble would be allowed to fail.
The new system would more closely follow the model of the FDIC, the organization that guarantees bank deposits. Despite hundreds of bank failures during the economic crisis, taxpayers have not needed to step in to fund the FDIC.
Housing market experts say that a limited government guarantee is necessary to ensure the availability of long-term, low-cost loans such as the traditional, thirty-year fixed rate mortgage.
On Wednesday, the National Association of Realtors issued a statement in support of Peters’ bill, saying: “We believe that a fully private system is not a viable or sustainable alternative to the existing housing finance system and will severely restrict mortgage capital, raise costs for qualified, creditworthy homebuyers, and place taxpayers at greater risk as too-big-to-fail government-backed financial institutions dominate the market.”
Reporting on Peters’ bill, the Wall Street Journal noted that it “…may be the only plan likely to attract sufficient support from both parties on a politically explosive subject.”
On Thursday, Peters visited a local home construction site in Royal Oak to meet with area builders, realtors and lenders to discuss the local impact of housing market reforms – and the need to ensure that homeowners can still obtain affordable mortgages.
Contact:
Clark Pettig
Office: (202) 225-5802
