What’s in Store for Housing Finance

ar123155599162025There have been some big decisions lately for the House Financial Services Committee. They voted for legislation that could possibly end government mortgage lenders like Fannie Mae and Freddie Mac in the distant future. On August 6th, President Obama stated at an appearance that private lending may replace these programs. However, it’s unclear whether this is possible or even desirable.

The bill that the House is currently considering will create a housing-finance market that is operated by a private sector. However the Senate bill will likely look to maintain control by government programs. The competition of these two visions for housing finance is what allows for voters to make decisions on what they want to see as well. In the past, voters were only allowed for a government program. The government hasn’t had a good record of housing finance however.

The new bill called the Protect American Taxpayers and Homeowners (PATH) Act is an actual reform of the program. The bill will gradually eliminate Fannie and Freddie over five years and creates a new FHA that is an independent, nonprofit corporation that will help home buyers who don’t have a lot of income or may be buying a house for the first time.

As the two bills compete for precedence, Americans will have a better choice when it comes to housing in the future either way.

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