On March 17, 2015, NAR issued a letter to Reps. Carney (D-DE), Delaney (D-MD), and Himes (D-CT) thanking them for introducing the “Partnership to Strengthen Homeownership Act,” a comprehensive approach to reforming the housing finance system. While NAR continues to analyze the details of the legislation, we appreciate that the bill ensures for an explicit government guarantee, which will protect the affordable 30 year fixed rate mortgage. The explicit government guarantee also works as a countercyclical mechanism to ensure mortgage capital is available across the country during all economic conditions.
The legislation would establish an insurance program through Ginnie Mae whereby it makes available the full faith and credit of the Federal Government on qualifying mortgage-backed securities. Under this system, all government guaranteed securities will be supported by a minimum of 5% private sector capital in the first loss position. The remaining 95% of the risk will be shared between Ginnie Mae and a private reinsurer on a pari passu basis (on at least a 90% to 10% split).
NAR firmly believes comprehensive housing finance reform is needed to ensure for a safe and robust housing market. As NAR continues to evaluate legislative options to reform the secondary mortgage market, we believe the Carney, Delaney, and Himes legislation is an important step forward in this discussion.