Bipartisan Policy Center Holds Housing Forum
The Bipartisan Policy Center hosted a regional housing forum in Idaho on August 21, 2014, featuring discussions on housing finance reform, the Housing Credit, the Federal Housing Administration (FHA), and rural housing.
In his opening remarks, U.S. Senator Mike Crapo, Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs and member of the Senate Finance Committee, focused on the need to restore private consumer confidence in the housing markets through housing finance reform, FHA reform, and improvements in the Dodd-Frank Financial Reform Act. Responding to audience questions, Crapo said that the FHFA needs to issue more rigorous regulations to restore private sector investors’ confidence in Fannie Mae and Freddie Mac. On housing finance reform, Crapo described his efforts to pass the Johnson-Crapo housing finance reform bill, which he said represents a balance between the status quo and eliminating the GSEs, which he said he does not think would help restore investor confidence in the housing market.
BPC Housing Commission co-chair and former HUD Secretary Henry Cisneros reiterated the Commission’s recommendation that Congress increase Housing Credit authority by 50 percent, which Cisneros said is necessary to meet growing rental housing needs and to prevent some people from falling back into poverty and homelessness. Cisneros also criticized current housing policy for not reaching more low-income families, saying that only one out of every four eligible families receives assistance and housing help is not targeted enough to extremely low-income families, who earn 30 percent of area median income or less.
Another BPC Housing Commission co-chair, former Senator and HUD Secretary Mel Martinez, emphasized that housing finance reform is necessary. Martinez agreed with Crapo that Fannie Mae and Freddie Mac’s current state is negatively affecting private sector investors’ confidence in the housing market. When Martinez was asked if he thought that GSE reform could happen before the mid-term elections or even the 2016 presidential election, he replied that it is very unlikely.
During one of the discussions, FHA Commissioner Carol Galante stated that the FHA would not require further financial aid from the U.S. Treasury, as the FHA fund continues to improve. Last year, the FHA received $1.7 billion from the Treasury after ending the fiscal year with a $7.8 billion negative net worth. One reason for the FHA’s improving financial situation is more revenue generated by higher mortgage insurance premiums. Galante acknowledged that some people support lowering the premiums but stated that the higher premiums were aiding the agency’s recovery while also covering the cost of the risk that is associated with the loans. Galante also predicted that FHA’s actuarial report due in November would provide further evidence of the agency’s continuing improvement. Galante also said she will be stepping down from her current position later this fall to take a teaching position at the University of California-Berkeley.