Bill Seeks Barrier Between MortgageOriginations and Secondary Market
WASHINGTON - (07/25/05) -- Senate Banking Committee ChairmanRichard Shelby, R-Ala., introduced legislation Friday that wouldallow a new regulator to adjust the assets held by Fannie Mae andFreddie Mac and to set a clear distinction, a so-called brightline, on which mortgage products and services the two secondarymarket giants could offer, a provision opposed by the credit unionlobby. The Shelby bill falls short of what Federal Reserve ChairmanAlan Greenspan called for last week when he urged Congress to setspecific limits on how much the two companies could hold in theirportfolios so is seen as having slim chances for final passagebecause it is at odds with the Bush Administration. The Shelby billalso does not include a provision in the version passed earlier bythe House Financial Services Committee requiring Fannie and Freddieto set aside a portion of their annual profits to fund affordablehousing projects. Both CUNA and NAFCU, each of which has lucrativereferral agreements with one of the two companies, as expressedopposition to the bright line provision, which is aimed at keepingthe two housing giants out of the market for mortgage originations.Both lobby groups argue such a clear distinction could inhibit thetwo companies' ability to aid smaller mortgage lenders, such ascredit unions, with new and innovative products andservices.