Mortgage Daily

Published On: May 31, 2005
Legislation Would Raise Conforming Limit

Committee passes Federal Housing Reform Act of 2005

May 31, 2005


Federal legislation that would raise the conforming limit to more than $500,000 has cleared its first hurdle by passing a House committee.The House Financial Services Committee passed the Federal Housing Reform Act of 2005 by a wide margin of 65 to 5. Backers expect the full House to vote on the bill this summer with the Senate Banking Committee voting on its version of the bill in June.

The bill creates a new regulatory agency that could act as a bank regulator in its oversight of Fannie Mae and Freddie Mac — which hold about $1.5 trillion of the country’s residential mortgage debt.

Accounting scandals and concerns about the management and long-term financial soundness and practices of the two giant Government Sponsored Enterprises, or GSEs, were a major factor in prompting the legislation, lawmakers said.

“The system we have in place is broken,” Committee Chairman Michael Oxley, R-Ohio, said in a statement. “The regulators who oversee these huge entities currently do not have all of the tools they need to supervise these huge, sophisticated businesses. (The legislation) is a strong remedy for these problems.”

The bill creates a new regulatory agency to replace the Office of Federal Housing Enterprise Oversight. The regulator has the power to increase minimum and risk-based capital standards, the House committee said in a joint statement.

The regulator also has the authority to adjust the GSEs portfolio holdings and can take corrective actions with “enforcement powers,” the committee said.

The bill gives the GSEs a mandate to focus on affordable housing and includes improvements in corporate governance, designed to prevent some of the management and accounting problems Fannie and Freddie have had in the recent past.

However, the bill also allows GSE loan limits to increase from $359,650 to more than $500,000 in high-priced and booming real estate markets such as California, Dow Jones reported.

That provision prompted concern from the White House that the GSEs are moving too far from their core mission of expanding the housing market to people who can’t afford a house.

“The administration believes the (companies’) mission should be focused on expanding housing opportunities for low- and moderate-income Americans,” Trent Duffy, a White House spokesman, reportedly told Dow Jones.

Chuck Greener, a Fannie Mae senior vice president and spokesman, said the bill “is a significant step forward in the process of strengthening the safety and soundness oversight of our company and the GSEs.”

“We are hopeful a bill will be signed into law this year,” Greener said in a statement.

Passage of the bill was lauded by the Mortgage Bankers Association.

“The secondary mortgage market plays a vital role in the mortgage industry and has contributed to the unprecedented growth in home ownership in this country,” Kurt Pfotenhauser, senior vice president of government affairs at the MBA, said in a statement. “It is important to ensure the safety and soundness of the GSEs, and the MBA believes the legislation…accomplishes this goal by establishing an effective and empowered regulator.”

But the Bush administration, while encouraged that the bill has passed committee, wants the legislation to go farther. The White House has pushed for limits in the GSEs mortgage holdings.

Housing Secretary Alphonso Jackson said in a statement that the bill, sponsored by Rep. Richard Baker, R-La., “improves upon past legislative efforts in Congress.”

“However, the administration is concerned that some core principles, essential to ensuring GSEs fully carry out the mission granted to them by Congress of promoting affordable housing and home ownership, have not been included,” said Jackson, who pledged to continue to monitor the legislation.

But Baker said under the bill the new regulator has the power to act on the Bush administration’s concerns.

“I share the administration’s concerns about GSE portfolio holdings,” Baker said in a statement. “There is nothing in the bill as written that would stop the new regulator, whose director this administration would nominate, from pursuing exactly the same politics on portfolio that the administration is calling for.

“More than I anything I hope to engage the administration on this issue and to continue working together so that we can move forward on sweeping legislative reform and not be stymied by minor disagreements over a portfolio issue that nobody was even talking about six months ago,” Baker said.

Patrick Crowley is a feature journalist and blogger, and a reporter and columnist for The Cincinnati Enquirer. Email Patrick at: [email protected]

Political Mortgage News | Mortgage Laws
Mortgage people in politics. Political contributions by mortgage companies. Coverage of political support by lenders and executives. GSE lobbying and issues.

Tools for Your Next Big Decision.

Amortization Calculator

Affordability Calculator

Mortgage Calculator

Refinance Calculator

FHA Mortgage Calculator

VA Mortgage Calculator

Real Estate Calculator


Pre-Approval Resources!

Making well educated decions in a matter of minutes and stay up to date on the latest news Mortgage Daily has to offer. Read our latest articles to stay up to date on what’s going on…

Resource Center

Since 1998, Mortgage Daily has helped millions of people such as yourself navigate the complicated hurdles of the mortgage industry. See our popular topics below, search our website. With over 300,000 articles, we are guaranteed to have something for you.

Your mortgages approval starts here.

Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here. Add 1-2 sentence here.

Stay Up To Date with Today’s Latest Rates


Today’s rates starting at


5/1 ARM
$200,000 LOAN

Home Refinance

Today’s rates starting at


$200,000 LOAN

Home Equity

Today’s rates starting at


$200,000 LOAN


Today’s rates starting at


$200,000 LOAN