Mortgage Reform Likely to Pass House in ’13, Garrett Says

The U.S. House of Representatives
is likely to pass a bill this year to reduce the influence of
the government-backed Federal Housing Administration, Fannie Mae
and Freddie Mac, Representative Scott Garrett said today.

Government-backed mortgages have accounted for more than 90
percent of U.S. housing financing since 2008, when the private
mortgage market dried up. As housing recovers and the
government-sponsored enterprises — Fannie Mae and Freddie Mac
— return to profitability, it’s time to rely more heavily on
the private sector, said Garrett, a Republican from New Jersey.

“This is all being financed by the federal government —
by us, the taxpayer,” Garrett, chairman of the House Financial
Services Subcommittee on Capital Markets and Government-
Sponsored Enterprises, said at the Milken Institute Global
Conference in Beverly Hills, California. “We should be able to
get GSE reform and FHA reform done in this calendar year. We’ll
get it done in the House and send it over to the Senate, where
normally all good bills go to die.”

The U.S. housing market has been climbing out of its worst
collapse since the Great Depression as buyers seek to take
advantage of mortgage rates near record lows and home prices (SPCS20)
that are 29 percent below their 2006 peak. Prices rose 9.3
percent in February, the fastest pace since May 2006, according
to the SP/Case-Shiller index of property values in 20 cities,
released today.

Quick reform of housing finance may endanger the recovery,
said Emile Haddad, chief executive officer of FivePointe
Communities Inc., a residential-community developer based in
Aliso Viejo, California. He also spoke at the conference today.

Boat Rocking

“The last thing we should do now is rock the boat,” said
Haddad, whose company controls 50,000 lots in master-planned
communities in San Francisco, Los Angeles and Orange County,

Garrett, who has yet to introduce a mortgage-reform bill in
Congress’s current session, said all government-backed agencies
must be reformed at once, with accounting transparency and
continued access to mortgages for moderate-income Americans —
the type of loans insured by the FHA.

“We will still, even though I’m a free-market capitalist,
have a federal imprint on housing when all is said and done,”
Garrett said.

The FHA, a government-mortgage insurer, is facing losses
due to defaults on loans it backed as the housing market
collapsed, and may need a taxpayer subsidy of almost $1 billion
this year, according to White House budget analysts. The bailout
makes it more likely Democrats will join Republicans in
reforming mortgage agencies, Garrett said.

To contact the reporter on this story:
John Gittelsohn in Los Angeles at

To contact the editor responsible for this story:
Kara Wetzel at

Comments are closed.