Mortgage Outlook Under Dems

Rep. Barney Frank, D-Mass., is in line to take over the House Financial Services Committee. Sen. Chris Dodd, D-Conn., is likely the next chairman of the Senate Banking Committee. Those panels focus on most mortgage and housing related issues and have not been especially partisan in the past, Pfotenhauer said.

“These are more bipartisan committees than partisan,” he said. “The Financial Services Committee in particular tends to be driven by facts and figures more than conservative or liberal ideology.”

Dodd agreed, according to a statement he made shortly after the Nov. 7 election.

“In my view, the Banking Committee has historically risen above the caustic rhetoric that over the past few years has too often passed as legislating here in Washington,” Dodd said. “This Committee has a long tradition of members working on a bipartisan basis.”

Pfotenhauer said Frank has a passion for low and moderate income housing concerns. “He understands and knows the programs well,” Pfotenhauer said.

Frank hasn’t shown his hand on how what legislation he’ll pursue after the new Congress is sworn into office.

“I know there will be a great amount of interest in the agenda of the committee, but right now it is too premature to discuss any agenda items that the committee will or will not consider next year,” Frank said in a statement.

But in a statement posted on his Congressional Web site, Frank said it is an “outrage” that the federal government has not been more active in financing affordable housing in recent years.

“What the Republicans have done is essentially say no more federal funding for construction of housing except for a small amount for the elderly and the disabled,” Frank said. “All they do is give Section 8 vouchers. That program is better than nothing, but it doesn’t help the supply.”

Pfotenhauer said he expects Frank’s committee to take up reforms of Freddie Mac and Fannie Mae. The government-sponsored enterprises, or GSE’s, are recovering from accounting and management scandals.

Pfotenhauer said he also expects some attention to the Federal Housing Administration, or FHA.

FHA should have the ability to vary its products with new innovations, he said. Under the current system Congress has to pass a law before FHA can offer a new product.

“We’d like to see FHA offer new products without going to Congress,” Pfotenhauer said.

Frank has also backed a proposal to let FHA charge more insurance on subprime loans but to reduce costs to more credit worth buyers.

“If we are able to provide over time that folks are good or a better credit risk we need to be able to change the cost of mortgage insurance based on performance,” Pfotenhauer said. “If there is a practical way to do it, it’s not unreasonable.”

Dodd has said he is also committed to expanding home ownership, but he is concerned about how much debt some borrowers have taken on.

“Rising home prices have put homeownership out of reach for more people than at any other time in almost 15 years,” he said in a statement. “The amount of household and mortgage debt as a percentage of disposable income is at its worst levels in over a quarter of a century — putting countless Americans on the financial brink.

“In many respects, the American Dream is at risk in a way it has never been before,” he said. “I do not intend to preside over its demise, but rather to do everything possible for its revival.”

The MBA expects Congress to address predatory lending laws. State and local laws are being overturned — as recently occurred in Ohio and Maryland — or proving ineffective, Pfotenhauer said.

“We are in favor Congress enacting a uniform national standard with the specifics to be debated,” he said.

Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: PatCrowley@MortgageDaily.com