We told you about the plan to restructure Fannie Mae and Freddie Mac that was introduced by Virginia Senator Mark Warner and his Senate Banking Committee colleague Bob Corker (R-Tenn.). In fact — shameless plug — Sen. Warner outlined that plan for us in Pieces of Home, our Virginia Housing Market Report.
The committee took the Warner/Corker plan, made some tweaks, and ranking members Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) introduced it at a press conference.
The plan would replace Fannie and Freddie with a new agency called the Federal Mortgage Insurance Corp. The government would become the “insurer of last resort” as the New York Times put it; private investors would have to take the first losses and lenders would be required to maintain 10 percent private capital reserves. A one-tenth-of-a-percent fee would fund the government’s insurance plan.
The plan also sets a minimum down payment of 3.5 percent for first-time home buyers, and 5 percent for everyone else, and provides for a single platform for packaging mortgages into mortgage-backed securities.
NAR welcomed the proposal, but said it hasn’t changed its stand on what it wants to see in a restructuring of the secondary mortgage market. “Any restructuring of the secondary mortgage market must ensure a reliable and affordable source of mortgage capital for consumers, in all types of markets,” said NAR President Steve Brown.
A bill now needs to be formally drafted, voted on by the committee, (which is almost certain to pass it) and then sent to the full Senate.