Urban Institute Analyzes Johnson-Crapo Bill

United for Homes and National
Housing Trust Fund Update

Urban Institute Analyzes Johnson-Crapo Bill A Johnson-Crapo Dialogue, a commentary issued by the Urban Institute Housing Finance Policy Center, summarizes the major policy disagreements associated with the “Johnson-Crapo” housing finance reform bill, and the future prospects for this bill and housing finance reform as a whole.

The paper is a “must read” for anyone who wants to better understand the intricacies of the current housing finance reform debate. The Johnson-Crapo bill provides a dedicated source of revenue for the National Housing Trust Fund estimated to be $3.75 billion a year. It winds down Fannie Mae and Freddie Mac, and establishes the Federal Mortgage Insurance Corporation.

The paper is based on interviews with three Urban Institute affiliated housing experts, Laurie Goodman, Jim Parrot, and Ellen Seidman. The commentators agree that there is broad consensus on how the Johnson-Crapo bill addresses housing finance reform, but identified two key policy areas that ultimately stymied progress on the bill:

  • One concerned the requirement that the private sector take on risk and losses before the federal guarantee would take effect; and
  • The other pertained to the design and reach of affordable homeownership features, and the mechanisms to ensure that underserved communities would still have access to affordable mortgage credit.

In the absence of legislation, the administrative steps that the Federal Housing Finance Agency (FHFA) could take to achieve some of the goals of housing finance reform were explored, including lifting the suspension of Fannie Mae and Freddie Mac contributions to the National Housing Trust Fund (NHTF).

The Johnson-Crapo bill was voted out of the Senate Committee on Banking, Housing, and Urban Affairs on May 15, 2014 with a bipartisan vote of 13-9. Notably six Democrats voted against the bill in committee. Prospects are dim that the full Senate will take up the bill before the end of this Congress. Senator Robert Menendez was one of the no votes.

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Click here for the full paper.