Page 55 - September October 2018 Disruption Report Flip Book

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How Ginnie Mae could break the stalemate on housing finance reform
The two Europes
The two key sticking points to housing finance reform include (i) will mortgages still have government backing? and (ii) what federal agency will be that source of backing?
The latest reform proposal, sponsored by House Financial Services chairman Jeb Hensarling (R-TX), John Delaney (D-MD) and Jim Himes (D-CT), provides answers to both. In their housing finance reform initiative, the government will provide a guarantee that will likely reside in Ginnie Mae and an agency resembling it.
“At the end of the day ... there is going to be a lot of similarities between the existing Ginnie Mae infrastructure and what housing finance reform is going to look like,” said Raymond James analyst Ed Mills.
“We’ve seen a transformation in the conversation over the last decade from this whiteboard approach to a more targeted and I think nuanced reassessment of what’s possible,” said Compass Point Research’s Isaac Boltansky. “Ten years ago, your average member of the House Financial Services Committee probably couldn’t detail the differences between Ginnie Mae and the GSEs. After a decade of hearings, white papers and reform proposals, the effectiveness of the Ginnie Mae public-private model has become clearer.”
Nevertheless, the Hensarling-Delaney-Himes bill is not expected to advance in the near future, given Democratic lawmakers’ concerns that its affordable housing resources are inadequate and the constraints on the legislative calendar, given the upcoming midterm elections. Hensarling and Delaney are both retiring this year. The lawmakers likely proposed their bill to ““put a policy stake in the ground” for future discussions, said Anne Canfield, executive director of the Consumer Mortgage Coalition. (American Banker, Hannah Lang, 11/11/18)
Inside Mortgage Finance’s Paul Muolo wrote:
Although legislative reform of Fannie Mae and Freddie Mac is dead for
now, Ginnie Mae supporters continue to worry about what might happen to agency MBS spreads if the government-sponsored enterprises get an explicit guarantee on their MBS.
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