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64 Meanwhile, Fannie Mae and Freddie Mac would continue paying all of their profits to the Treasury for the next five years until their eventual wind-down. Among the list of touted benefits: e proposed revamp would protect taxpayers from bearing the cost of a housing downturn; promote stable, liquid, and efficient mortgage markets for single-family and multifamily housing; ensure that affordable, 30-year fixed-rate pre-payable mortgages continue to be available; and that affordability remains an important consideration. is would provide equal access for lenders of all sizes to the secondary market, as well as facilitate broad availability of mortgage credit for eligible borrowers in all areas and for single-family and multifamily housing types. "It is critical that we vote on reforming our broken housing system," chairman Crapo said. "We have produced a strong, bipartisan product, and I look forward to working with my colleagues to move this legislation forward and end the five- year-plus status quo." "Our housing finance system is badly in need of reform. And it is clear from the reaction to our announcement that many people agree," Johnson said. Indeed, initial industry reactions to the proposal were, by and large, positive, with Mortgage Bankers Association president David Stevens praising the bill as a "comprehensive solution to improve the function of the secondary mortgage market in a way that engages private capital and reduces risk for taxpayers" and the National Association of Home Builders (NAHB) urging the Senate to move quickly on it before the midterm elections. at's not to say it's without detractors, however. Minority advocacy groups—including the National Fair Housing Alliance (NFHA), the National Council of La Raza, and the National Association for the Advancement of Colored People (NAACP), among others—have criticized the reform effort, arguing it doesn't do enough to incentivize lenders to work in underserved areas and "would needlessly make mortgages more expensive and less available," particularly to minority and low-income households. Also not likely to support Johnson-Crapo are the GSEs' shareholders, some of whom have taken drastic steps to claim their share of the GSEs' profits now that the two companies are making good. Deciding what to do has the potential to create another artificial housing boom, followed by a major bust, critics say. ose adamantly opposed argue that it would take from the much needed capital that should be used to protect our housing finance market—a $9 trillion sector with virtually no equity capital backing it today—all to promote lending to lower-income homebuyers. On April 22, 25 conservative groups under the Competitive Enterprise Institute (CEI)— including the American Civil Rights Union, Institute for Liberty, and Tea Party Nation—sent a letter to the Senate Banking Committee opposing the reform, saying that "it does not constitute real reform, but [is] an expansion of the type of government intervention that fueled the housing crisis in the first place." While they believe the GSEs should be phased out, they don't think they should be replaced, citing an increase in moral hazard and taxpayer risk. e letter continued, "While no one should be guaranteed a return on investment, federal law should respect GSE shareholders at the same level as state corporate law in liquidations and reorganizations." e letter then closes out by suggesting reducing overregulation from laws, showing respect to shareholder rights in an effort to pique the private sector's interest in investing in housing once again. But there's also another notable bill on the horizon—although much further behind in the race. Rep. Maxine Waters (D-California), the ranking Democratic member of the House Financial Services Committee, has a similar bill, with the major distinction being that it would create a co-op of lenders that would be the sole issuer of mortgage-backed securities guaranteed by the government. In the end, Waters says her goal is to preserve the affordable 30-year fixed-rate mortgage that will provide a government guarantee paid for by the industry. Her bill "will also end the perverse incentives created by Fannie Mae and Freddie Mac's ownership structure of private shareholders," according to Waters. While there are likely enough votes for the Johnson-Crapo bill to get past the banking committee, it will likely find a hard stop in the Republican-controlled House, which also does not bode well for the Waters bill but will at least be enough to start the conversation on housing reform. Although with midterm elections coming up, there could be an even greater delay or lack of interest. In the words of HUD secretary Shaun Donovan at a recent Bipartisan Policy Center event: "Is this bill perfect? Of course not. Despite its imperfections, does this bill represent progress? Absolutely." It's one of the great polarizing topics that LEGISLATORS CAN GO OUT THERE AND KEEP TALKING ABOUT AND GET EVERYBODY ELSE SPUN UP AND ENERGIZE THEIR BASE FOR DIFFERENT REASONS. I wouldn't call reform insincere but the timing is convenient during election year and it's headline grabbing stuff.

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