Reform of Secondary Mortgage Market Moves Forward, Again

WASHINGTON – The House last week once again approved a bill to create a new regulatory scheme for secondary mortgage market giants Fannie Mae and Freddie Mac, as well as the 12 Federal Home Loan Banks, but the measure has dubious prospects because of disapproval in the Senate. In fact, lobbyists were predicting the bill will die again, as it did in each of the last two congresses, because of insistence by the Bush administration that the regulator have full authority to require Fannie and Freddie to sell some of their huge mortgage holdings. Language included in the House bill would only allow the regulator to do so when issues of safety and soundness arise. The bill has little for credit unions, except one provision which would create an affordable housing fund–similar to the ones required by the FHLBs. But the Fannie and Freddie fund would provide as much as $3 billion to qualified projects, including those involving credit unions, over a five-year period.