But the financial crisis has meant the withdrawal of Fannie Mae and Freddie Mac, along with other financial institu- tions, from the LIHTC market. House Financial Services Committee Hearing on the Fu- ture of Housing Finance. House Financial Services Committee Hearing on the Future of Housing Finance. I would like to take a moment to explain what these numbers mean for some of small dollar loans Alaska your constituents. It was made possible in part by permanent debt originated by Enterprise and purchased by Fannie Mae, as well as Low Income Housing Teix Credit equity that was purchased in part by Freddie Mac through an Enterprise multi-investor fund. Residents have access to playgrounds and computer centers. Importantly, residents also have access to a day care center, providing a safe place for children while their parents are at work. Were it not for the support from the Government-sponsored secondary market, this development and many oth- ers would not exist.
Principles for Housing Finance Reform: Liquidity, Stability, and Afford- ability Any new housing finance system must provide liquidity, stability, and afford- ability. Access to capital for underserved communities — whether small rural towns, tribal communities, or low-income urban neighborhoods — must be preserved. In gen- eral, we believe that the Government should have a role, albeit more limited, in the housing system. CDFIs, small community banks, credit unions, regional banks, large national small dollar loans Alaska banks. State Housing Finance Agencies, the Federal Home Loan Bank System, and national intermediaries are all needed in a robust housing finance system.
Any new housing finance system should ensure choices and access to capital for all commu- nities and for all lenders. A return to the redlining of the 1970s is not acceptable — no one should have to pay more for a mortgage because they live in a certain place. Rural areas and economically distressed areas should have access to cap- ital for affordable sustainable home ownership and rental housing through both the primary and secondary markets. However, to ensure a robust sec- ondary mortgage market and appropriate risk-sharing, other ways to provide mortgage securitization are necessary. Further, changes are needed in struc- ture, personnel rules, and risk-sharing programs to make FHA an optimally ef- fective provider of capital for affordable housing. We cannot rely on the private sector alone to pro- vide financing or to continue to invest in payday loans Louisiana the Low Income Housing Tax Credit (LIHTC) and other proven, efficient public-private programs.
Conclusion Any movement from the current GSE structure must be done Wisconsin installment loans carefully and over time to avoid a further weakening of the housing market.
The GSEs are imperfect partners, but served an important role in providing access to credit that would oth- 156 erwise not be available. We are working to develop more specific recommendations for the future of the housing finance system. Above all, we support a housing finance system that provides liquidity, sta- bility, and affordability. We look forward to working with you as you further con- sider changes to our housing finance system. I appreciate the opportunity to testify and look forward to your questions. I am proud to be part of a four-generation, family owned residen- tial real estate business in Rhode Island.
As I have mentioned to you during prior testimony, my passion is making the dream of home ownership available to Amer- ican families. I am proud to testify today on behalf of the more than 1. Eederal housing policies must be adequately assessed, and proper homework must be done before action is taken. The Government-sponsored enterprises (GSEs) were created to support this specific mission within the sec- ondary mortgage market, and any replacements must meet this criterion as well. Future secondary mortgage market entities must be created with this mission as their basis in order to ensure that citizens will always have access to affordable mortgage capital.
When reviewing current legislation that effectively constrains, or shuts-down, Fannie Mae and Freddie small dollar loans Alaska Mac and relies only on private capital to operate the secondary mortgage market (e. In both instances, mortgage capital became nearly nonexistent, which prohibited qualified borrowers from access to the funds required to purchase a home.
Unlike private secondary market investors, Fannie Mae and Freddie Mac remain in housing mar- kets during downturns, using their Federal ties to facilitate mortgage finance and support home ownership opportunity for all creditworthy borrowers. Without Fannie Mae and Freddie sta 3 dng true to their mission of providing affordable mortgage capital during the current market disruption, there would have been a more serious disruption to the market. Since being placed in conservatorship, NAR has closely monitored the impact of the current market turmoil on both Fannie Mae and Freddie Mac. As the market turmoil reached its peak in late 2008, it became apparent that the role of the GSEs, even in conservatorship, was of utmost importance to the viability of the housing market as private mortgage capital effectively fled the marketplace. Table 1 Share of Mortgage Securitization Market By Segment As you can see from the above chart, if no Government-backed entity existed as private mortgage capital fled to the side lines, the housing market would have come to a complete halt and thrown our Nation into a deeper recession, or even a depres- sion.
Earlier this year, NAR signed onto an industry letter that espouses the funda- mental principles that we all believe are required to ensure a viable secondary mort- gage market going forward (see. Without a secondary market, mortgage interest small dollar loans Alaska rates would be unnecessarily higher and unaffordable for many Americans. In addition, an inadequate sec- 158 ondary market would impede both recovery in housing and the overall economic recovery.
The current GSEs should be replaced with Government chartered, nonshareholder owned entities that are subject to sufficient regulations on prod- uct, revenue generation and usage, and retained portfolio practices in a way that ensures they can accomplish their Florida need cash mission and protect the taxpayer. Unlike a Federal agency, the entities will have considerable political independence and be self-sustaining given the appropriate structure.
Middle class consumers need a steady flow of mortgage funding that only Government backing can provide. Teixpayer risk would be mitigated through the use of mortgage insurance on loan products with a loan-to-value ratio of 80 percent or higher and guar- antee or other fees paid to the Government. This is essential to ensure bor- rowers have access to affordable mortgage credit. The organi- zation must set standards for the MBS they guarantee small dollar loans Alaska that establish trans- parency and verifiability for loans within the MBSs.