posted by admin on May 20

The Senate Banking Committee has approved a housing bill by a 19-2 vote that strengthens regulation of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and authorizes the Federal Housing Administration to refinance struggling homeowners with “underwater” mortgages.

Banking Committee Chairman Christopher J. Dodd, D-Conn., said the bill addresses foreclosure prevention, provides a strong regulator for the government-sponsored enterprises, and creates an affordable housing trust funded by Fannie and Freddie. Sen. Dodd said it is “a good bill and a balanced bill” that resulted from weeks of negotiations with Sen. Richard C. Shelby, R-Ala. “In my judgment, this legislation creates a regulator that has the authority and flexibility to regulate the GSEs appropriately,” Sen. Shelby said at the committee mark-up session.

The Alabama senator said he is pleased that the cost of the FHA refinancing will be borne by an affordable housing fund and not taxpayers. “I believe we should do all we can to help struggling homeowners, short of asking the taxpayers to foot the bill,” he said. Sen. Charles E. Schumer, D-N.Y., raised concerns about the jumbo loan provision, which raises the conforming limit in high-cost areas to $550,000. “I want to have it higher,” he said. He also objected to barring Fannie and Freddie from holding these higher-balance loans in portfolio because there is no market for securitized jumbos, and it will effectively block the GSEs from buying jumbos from lenders. The House GSE bill allows the new regulator to decide whether Fannie and Freddie should securitize jumbos or hold them in portfolio.