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).