{"id":20515,"date":"2014-04-14T11:10:40","date_gmt":"2014-04-14T15:10:40","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=20515"},"modified":"2014-04-14T11:16:49","modified_gmt":"2014-04-14T15:16:49","slug":"sons-of-fannie-mae-wsj-shares-our-view-of-current-fanniefreddie-reform-legislation-in-senate","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/20515\/sons-of-fannie-mae-wsj-shares-our-view-of-current-fanniefreddie-reform-legislation-in-senate\/","title":{"rendered":"“Sons of Fannie Mae”: WSJ Shares Our View of Current Fannie\/Freddie “Reform” Legislation in Senate"},"content":{"rendered":"

For weeks, CFIF has detailed<\/a> the hazard presented by two proposed Senate bills – Johnson\/Crapo and Warner\/Corker – claiming to offer home finance “reform” of Fannie Mae and Freddie Mac.<\/p>\n

It was therefore refreshing to see The Wall Street Journal<\/em> reach the same conclusion<\/a> this morning in its opinion piece entitled “Sons of Fannie Mae.”\u00a0 While reform of Fannie and Freddie is indeed critical, the latest attempt from Senators Tim Johnson (D – South Dakota) and Mike Crapo (R – Idaho) isn’t the answer.\u00a0 “The bad news,” it reads, “is that the Senators want to replace Fan and Fred with multiple private mortgage bond issuers that would each also have a\u00a0 taxpayer guarantee.”<\/p>\n

It continues:<\/p>\n

While Johnson-Crapo claims to end Fan and Fred’s “affordable housing” requirements, the bill is larded with provisions to encourage and subsidize loans to non-creditworthy borrowers while driving up the price of housing.\u00a0 The bill includes a new 0.1% tax on federally insured mortgages that will be distributed to housing slush funds across the bureaucracy.”<\/p><\/blockquote>\n

The bill also promises to continue subsidizing mansions that don’t need help:<\/p>\n

On that point, Johnson-Crapo also ensures that the universe of loans eligible for subsidies will continue to grow.\u00a0 Under their proposal, the FMIC could raise the size of mortgages eligible for federal insurance as home prices rise.\u00a0 But it bars the agency from ever lowering this so-called conforming loan limit.\u00a0 Guess what would happen the next time a President runs for re-election?<\/p>\n

According to the National Association of Realtors, February’s median sales price of an existing U.S. home was $189,000.\u00a0 Yet Fannie and Freddie offer mortgages up to $417,000 across the country and in high-cost areas they run as high as $625,500.\u00a0 That means that with 20% down a borrower can get taxpayer help when paying more than $780,000 for a house.\u00a0 In most places that’s called a mansion.<\/p>\n

Beyond the obvious reasons wealthy buyers don’t need subsidies, the “jumbo” market for mortgages above the conforming limits has been thriving.\u00a0 At times in the last year jumbo rates have been lower than conforming rates and even now are within four-tenths of a percent.”<\/p><\/blockquote>\n

Fortunately, the piece ends on a high note, highlighting superior alternative legislation from Congressman Jeb Hensarling (R – Texas):<\/p>\n

Some of our friends say the political window to kill Fannie and Freddie is closing, and Johnson-Crapo is the only vehicle that can do so because it is the only one that has White House support.\u00a0 We’re not so sure.\u00a0 Texas Rep. Jeb Hensarling has a better reform in the House, and a GOP Senate might be able to cut a better deal next year.\u00a0 The Senate should go back to the drawing board and come up with a reform that doesn’t use the demise of Fan and Fred to create a dozen mini-me replacements that could grow to become the same monsters.”<\/p><\/blockquote>\n

Well said.<\/p>\n","protected":false},"excerpt":{"rendered":"

For weeks, CFIF has detailed the hazard presented by two proposed Senate bills – Johnson\/Crapo and Warner\/Corker – claiming to offer home finance “reform” of Fannie Mae and Freddie Mac. It was therefore refreshing to see The Wall Street Journal reach the same conclusion this morning in its opinion piece entitled “Sons of Fannie Mae.”\u00a0 […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1174,1175],"class_list":["post-20515","post","type-post","status-publish","format-standard","hentry","category-posts","tag-fannie-mae","tag-freddie-mac"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/20515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=20515"}],"version-history":[{"count":8,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/20515\/revisions"}],"predecessor-version":[{"id":20523,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/20515\/revisions\/20523"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=20515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=20515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=20515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}