Housing bills advance with pluses, minuses for bankers

Bloomberg

WASHINGTON — The Senate Banking Committee passed a package of housing bills unanimously in a 24-0 vote. 

The package, championed by Senate Banking Committee Chairman Tim Scott, R-S.C. and the panel's ranking member Sen. Elizabeth Warren, D-Mass., is meant to slash red tape for housing construction and pump money into communities that are building more housing. It strikes at a priority for both parties — housing affordability and availability in different kinds of communities.

For bankers, the bill is broadly positive. It's full of mostly narrow legislative changes that one economist described as "no game-changer," but that should modestly increase the availability of capital to build housing.

"This bill is a welcome step in the right direction," said Isaac Boltansky, head of public policy at Pennymac. "It is not a panacea, but it moves the ball forward on supply, affordability, and program efficiency. With a few targeted fixes, especially relating to appraisals, it has real potential to become law and deliver meaningful improvements."

Manufactured housing  could benefit in particular. Manufactured housing gets expanded financing from the Federal Housing Administration, which the industry has been requesting for years, according to Jaret Seiberg, a managing director at TD Cowen. 

"We view manufactured housing as the biggest potential beneficiary from this legislation," he said in the note. 

Mortgage bankers have come out against a few of the provisions— despite being mostly supportive of the package — particularly on the Appraisal Modernization Act, introduced by Sen. Raphael Warnock, D-Ga. The Mortgage Bankers Association, in a letter to the committee, said the bill would require mortgage lenders to allow consumers to request second appraisals when they believe there might be an issue.

"The bill creates a de facto right to a second appraisal and requires the lender to bear the full cost," the MBA said in the letter. "This approach presumes wrongdoing without a formal adjudicative process, which could deter new entrants from joining the appraisal profession and result in higher borrower costs." 

The bill, despite its uniform bipartisan support, still has a long way to go to get to President Donald Trump's desk. Senate leadership will have to call up the legislation, and it's likely to fall behind other priorities like nominations and more controversial crypto market structure legislation. 

Warren told American Banker that she's optimistic about the bill's chances in the full Senate, despite the full schedule. 

"The fact that it's unanimous in committee and not a grudging unanimous, but enthusiastic, everyone on the banking committee owns a pee of this bill, and that increases the chances that we can get this thing through," she said. "Do the numbers, we have nearly a quarter of the entire Senate sitting in that room talking about how terrific this bill is."