Tester introduces bipartisan bill to reform housing market
Senator’s measure protects taxpayers and 30-year mortgage, dissolves Fannie Mae and Freddie Mac
(U.S. SENATE) – Senator Jon Tester continues to step forward as a leader in the U.S. Senate with today’s introduction of a bipartisan bill to reform America’s housing finance market.
Tester, at a press conference today announcing the measure, said his reform bill addresses an overlooked but critical part of the country’s economic recovery. He said he plans to use his clout as the new head of the Senate Banking panel that oversees government-sponsored housing organizations Fannie Mae and Freddie Mac to push his bill through the Senate.
“We’ve come a long way since the economic crisis, but the housing market remains our greatest piece of unfinished business,” Tester said. “With housing beginning to show signs of strength, now is the time to create a framework built to withstand the next financial crisis – a system that protects taxpayers, preserves the 30-year fixed rate mortgage, and ensures that small financial institutions can continue to serve rural communities.”
In 2008, the government put Fannie Mae and Freddie Mac in conservatorship, providing a taxpayer-funded backstop to ensure the accessibility and affordability of 30-year fixed-rate mortgages for American families.
As a result, the private mortgage market is struggling and today nearly every loan made in America comes with a government guarantee leaving taxpayers on the hook. Despite this unsustainable situation, there has still been no real reform to the housing finance system since the financial crisis.
Tester specifically shaped his bill, called the Housing Finance Reform and Taxpayer Protection Act, to make sure that smaller mortgage originators, such as the community banks and credit unions that dominate Montana’s housing finance market, are not crowded out of the mortgage market by bigger institutions.
Tester’s bill is supported by the Montana Bankers Association and the Montana Independent Bankers Association. It contains the following provisions:
- Winds down Fannie Mae, Freddie Mac and the Federal Housing Finance Agency (FHFA) within five years of bill passage.
- Transfers appropriate utility duties and functions to the modernized, streamlined and accountable Federal Mortgage Insurance Corporation (FMIC), modeled in part after the FDIC.
- Replaces the failed housing goals of the past with a transparent and accountable market access fund that focuses on ensuring there is sufficient affordable housing available. The fund is NOT paid for with tax dollars, but through a small FMIC user fee that only those who choose to use the system pay.
- Ensures financial institutions of all sizes have direct access to the secondary market so local banks and credit unions aren’t gobbled up by the big banks when Fannie and Freddie are dissolved.
Tester took over the Senate Banking Subcommittee on Securities, Insurance, and Investment in January. His bipartisan bill is supported by Senators Bob Corker (R-Tenn.), Mark Warner (D-Va.), Mike Johanns (R-Neb.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).