Legislation for GSE Reform Backed by National Association of Realtors

The National Association of Realtors announced its support today for comprehensive reform of the housing finance market which will work to guarantee affordable mortgages and protect taxpayers from more bailouts.

The bill known as the Housing Finance Reform Act of 2011, introduced to the House last month by Republican Representative John Campbell of California and Democrat Representative Gary Peters of Michigan, would take a comprehensive approach to reforming/dissolving Fannie Mae and Freddie Mac.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said that this type of bill is necessary for increasing confidence in the housing market, protecting the home buyers and taxpayers, and preserving the “fragile housing market recovery.”

According to The Atlantic, the legislation would place at least five private firms in charge of prime mortgages, and the resulting bonds would have a federal guarantee. The firms would be charged a fee, and only the bonds would be protected, not the firms. It would ensure a secondary mortgage market through guarantees to those investing in residential mortgage-backed securities, thus preserving access to a 30 year fixed rate mortgage.

Phipps feels a totally privatized system is not a sustainable replacement to the current housing finance system, as it could lead to restriction of capital, higher costs for home buyers, and allow the taxpayers to fall victim to government-backed financial institutions.

“NAR looks forward to working closely with Congress; the time has come to have a serious discussion about comprehensive reform and our nation’s housing finance system,” said Phipps. 

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