Corker Introduces Housing Finance Reform Bill

Senate Banking Committee member Bob Corker (R-TN) introduced housing finance reform legislation November 9 that would unwind Fannie Mae and Freddie Mac in 10 years and replace them with a private secondary mortgage market.  Corker’s bill, the Residential Mortgage Market Privatization and Standardization Act (S.1834), would also establish uniform mortgage underwriting standards and repeal the Dodd-Frank risk-retention provision requiring lenders and securitizers to retain some credit risk on mortgage-backed securities they issue. 

In place of the 20 percent down payment requirement federal regulators established for loans to avoid the risk-retention requirement, Corker’s bill would establish a 5 percent down payment minimum and require additional credit enhancement for loans with down payments of less than 20 percent.

In a press release announcing the bill, Corker stated “We are no closer to transitioning Fannie Mae and Freddie Mac off government life support than the day the firms were taken under direct government control in 2008.  We’re introducing this bill to lay down a marker and get a conversation going that Washington has put off for far too long.  We must begin the process of responsibly unwinding Fannie and Freddie.” 

Corker also released a brief summary of his bill.