Corker-Warner Mortgage Reform Bill Marks an Important Next Step
|Targeted News Service|
The introduction this week of proposed legislation by Sens.
The bill would establish a new so-called "
"This design emphasizes that the federal government and US taxpayers should be the 'last resort' source of credit support if loans backing mortgage securities fail in large numbers," Zigas said. "The
Stimulating Broader Access and Innovation
The bill also would support funding to help insure that the mortgage finance system can assure access for credit worthy low and moderate income borrowers that might not be well served by private risk insurers, and to partner with those insurers to identify responsible innovations through which sustainable credit can be made available. These activities would be financed through a small annual fee of between 5 and 10 basis points - hundredths of a percent -on mortgage securities benefitting from the
"No new mortgage finance system will be successful if it does not provide a way to address underserved markets and borrowers, and to partner with the private sector to extend credit in responsible but untried ways," said Zigas. "The inclusion of the proposed funding in the Corker-Warner bill is critically important to assuring effective credit access by all Americansand to help fund the needs of lower income renters who are bearing historically high rent burdens."
Further Changes Urged
In spite of the many positive aspects of the Corker-Warner proposal, Zigas called for further changes to enhance its value to American consumers. Specifically, Zigas called for the following changes:
* The proposed bill's purposes should be expanded to explicitly emphasize the
* The bill's proposed minimum 5 percent down payment requirement for mortgages backing the insured securities should be removed. A mandatory 5 percent down payment requirement may bar financing for too many households, and needlessly ties the proposed insurer's hands. Setting the terms for these mortgages should be left to a rulemaking process at the proposed agency after the full range of other underwriting considerations that make up comprehensive, responsible underwriting have been assessed.
Many Steps Yet Lie Ahead
The introduction of the Corker-Warner proposal is a promising, but very early step on what will likely be a years-long effort to replace
"Since Fannie Mae and
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