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Housing Finance Reform Bill introduced in Senate

Posted on Thursday, June 27, 2013 at 9:45:48 AM

A bipartisan housing bill was introduced by eight senators on Tuesday, June 25. The bill calls for the removal of Fannie Mae and Freddie Mac; the legislation instead proposes a new issuer - Federal Mortgage Insurance Corp.

Called the Housing Finance Reform and Taxpayer Protection Act of 2013, the bill has received praise from mortgage lenders and banks alike, and is predicted to make residential financing easier for home buyers if it were to pass into law.

"This bi-partisan legislation is a positive first step in what is certain to be a long process toward creating a sustainable, rational and limited role for the federal government in supporting and regulating a mortgage market that is appropriately and predominately filled by the private sector," said Frank Keating, president and CEO of the American Bankers Association, according to a HousingWire report.

But not everyone wants to see Fannie Mae and Freddie Mac dissolve, though.

Michael Kao, founder of hedge fund Akanthos Capital, said "the public-private model is a time-tested model," according to a report by The Street. Kao added that the legislation will accomplish little. 

Despite this, Jon Tester, D-MT, and one of the senators behind the bill, believes it will help repair the housing market and help the average American with residential financing.

"The last piece of rebuilding the economy is housing," said Tester. "This bill will provide certainty to the housing market."