The need for comprehensive housing finance reform to address the need for access to affordable housing was emphasized by Counselor to the Secretary of the Treasury Antonio Weiss and Assistant Secretary for Economic Policy Karen Dynan, in the first in a series of issue briefs that will focus largely on government-sponsored enterprises. Key features supporting access to mortgages and affordable rental housing, the authors said, involve:
- incentivizing affordable credit pricing;
- implementing “duty to serve” provisions for underserved markets;
- establishing national loss mitigation standards to bolster borrower protections through the cycle; and
- providing funds dedicated to affordable housing construction and preservation.
Affordable credit pricing. A mandate to provide credit to
all creditworthy borrowers through economic cycles should be a condition for being
able to issue mortgage-backed securities with a government guarantee, the issue
brief asserts. “To further promote broadly affordable pricing of credit, an
independent regulator could be invested with specific authorities, including,
but not limited to, the review and approval of guarantee fees.”
Neglected market segments. A duty to serve underserved
housing markets should be paired with appropriate incentives and enforcement
measures, according to Weiss and Dynan.
National loss mitigation standards. Housing finance reform
legislation, in the view of the Treasury officials, “should invest the housing
regulatory agency responsible for overseeing any regulated guarantor with the
authority to set and oversee loss mitigation standards for government guaranteed
and private mortgages.”
Multifamily affordable rental housing. To address a shortage
in affordable rental housing, Weiss and Dynan also see a need for housing
finance reform that provides financing that expands access for renters.
Coming next. Future commentaries in the series will address the
need for a system to support the housing market in both good and bad
economic times, create a level playing field for financial institutions and
consumers, and provide regulatory oversight.
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