WASHINGTON, D.C. – August 7, 2013 – (RealEstateRama) — Following the President’s speech today outlining priorities to overhaul the mortgage finance industry, U.S. Representative Gary Peters expressed encouragement that Washington is finally ready to get serious about developing common-sense GSE reform. Peters, who serves on the U.S. House Financial Services Committee, continues to fight for bipartisan GSE reform that both prevents bailouts paid for by taxpayers and protects the 30 year-fixed-rate mortgage. Peters is optimistic about the Administration and Congress working together on a comprehensive, bipartisan solution to fix the housing industry.
“I am encouraged today by signs that the President and Congress are ready to work together to develop a responsible, bipartisan solution to GSE reform that ends taxpayer bailouts while still preserving the 30-year-fixed mortgage for middle-class families.” Peters said. “It is critical for Washington to reform the housing industry in a manner that strengthens our housing market recovery and invests in middle class homeownership. For middle class families and those working hard to get there, affordable homeownership is the cornerstone of the American Dream, and that’s a promise Congress and the Administration must keep.”
Peters has fought to protect the 30-year fixed rate mortgage and responsibly wind down Fannie Mae and Freddie Mac. Most recently, he offered an amendment that would have ensured the continued availability of the 30 year-fixed-rate mortgage for middle class families in the mark-up of Financial Services Committee Chairman Jeb Hensarling’s partisan GSE reform bill. While Peters’ amendment earned bipartisan support, it was not included into the bill.
Last year, Peters worked with Republican Congressman John Campbell on a bipartisan plan to overhaul the federal mortgage system to prevent taxpayer funded bailouts and ensure access to affordable homeownership. The Wall Street Journal hailed their efforts, praising “the compromise proposed by Rep. John Campbell (R., Calif.) and Rep. Gary Peters (D.,Mich) may be the only plan likely to attract sufficient support from both parties…at a time when gridlock looms over issues such as how to curb federal spending.” In 2011, they introduced a plan to replace our current system, which allows GSEs to rack up massive profits while leaving taxpayers with all the risk, with privately capitalized entities authorized to purchase an explicit and limited guarantee covering the securities they issue. They proposed a new system that would be built on the concept of the Federal Deposit Insurance Corporation (FDIC) and would ensure that bedrock housing financial products like the 30-year fixed-rate mortgage remain accessible for qualifying households. In the 2011 proposal, securities issuers would be required to keep healthy capital reserves, which would stand in between taxpayers and potential losses, and would also pay into a privately-capitalized catastrophic reinsurance fund. The fund could only be tapped in after the issuer’s assets had been exhausted and would cover payment of principal and interest on mortgage-backed securities to investors only.
