Senate Banking Committee Approves GSE Reform Bill - Financial Regulation Relief Moves Forward

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Senate Banking Committee Approves GSE Reform Bill

(Editor's Note: MHCO has been working with the Oregon Congressional Delegation to move this Federal Legislaton forward in Washington DC. If you contacts with any of the members or staff of the Oregon Congressional delegation please let the MHCO office know. This is a very important piece of Federal Legislation and we do not want to miss any opportunity to help pass this legislation. Thank you.)

On May 15th, the Senate Banking Committee approved legislation (currently unnumbered) on a 13-9 vote that would eliminate Fannie Mae, Freddie Mac and overhaul the nation's secondary housing finance market.

The bill, authored by Chairman Tim Johnson (D-SD) and ranking member Mike Crapo (R-ID), now moves to the full Senate. A floor vote this year appears unlikely after several key Democrats on the panel voted against the plan out of concern that it goes too far in eliminating the current system and does not do enough to preserve affordable housing finance options.

The bill expands on legislation introduced last year by Sens. Bob Corker (R-TN) and Mark Warner (D-VA) and replaces Fannie Mae and Freddie Mac with a system where the government would explicitly guarantee big losses in the housing market but that relies on the private sector to play a larger role than it currently does in funding new mortgages.

Included in the Johnson-Crapo bill are provisions explicitly requested by MHI that would allow manufactured home loans, including those secured by personal property, full access to the newly envisioned secondary market system.

Included in the legislation is a provision requiring the Consumer Financial Protection Bureau (CFPB) to review the impact HOEPA High-Cost Mortgage and Loan Originator provisions are having on credit availability in the manufactured housing market. The language also directs the Government Accountability Office (GAO) to complete a study on how these provisions impact credit available to those seeking to purchase manufactured housing. The provisions, which were requested by Sen. Joe Manchin (D-WV), were adopted during mark up.

Despite strong objections from majority members of the committee over any efforts to include Dodd-Frank-related amendments, the Manchin provisions represented a compromise approach and will serve to ensure that the CFPB remains focused on the need to provide the manufactured housing market with relief from recent rulemakings.

Committee Prepares for Recorded Vote on Manufactured Housing Legislation

On May 22nd, the House Financial Services Committee is scheduled to take recorded votes on a number of measures reforming portions of the Dodd-Frank Act. Included in this will be the Preserving Access to Manufactured Housing Act (H.R. 1779).

The committee marked up a number of measures on May 7th. H.R. 1779 was approved by voice vote, but a recorded vote was requested. While the measure is expected to formally be approved by the committee next week, the recorded vote is an opportunity to underscore the bipartisan support that exists for the bill. Once approved by the committee, the measure will await floor consideration.

During the mark up, the measure received bipartisan support from the committee's ranking member Maxine Waters (D-CA) and bill cosponsor Rep. Terri Sewell (D-AL). Others speaking in strong support of the measure included Financial Services Committee Chairman Jeb Hensarling (R-TX) and Reps. Andy Barr (R-KY), Shelley Moore Capito (R-WV), and Steve Pearce (R-NM).

The bill would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) to change the criteria by which home loans are classified "high-cost" while keeping in place strong consumer protections. Sponsored by Representatives Stephen Fincher (R-TN), Bennie Thompson (D-MS), and Gary Miller (R-CA), the bill is cosponsored by 113 House Members on both sides of the aisle.

The legislation would also clarify that manufactured home retailers and salespersons would not be considered loan originators unless they receive compensation from a lender, mortgage broker or loan originator. The CFPB "loan originator" definition effective since January, is based on traditional mortgage market roles that do not equate with the business model of the manufactured housing industry, including lending and retail sales practices. Without this clarification, manufactured home buyers will be unable to receive guidance on the limited manufactured home financing resources available.