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GSE Reform Legislation Languishes in Shadow of Elections

The clock is ticking on legislation to regulate Fannie Mae and Freddie Mac, the Mortgage Bankers Association warned here last week.

Worried that only a few months are left before lawmakers plan to return to their home districts for the November elections, the MBA's chief lobbyist, Kurt Pfotenhauer, said the now-or-never point is rapidly approaching in the effort to create a new, more powerful regulator.

"If GSE reform is going to go forward, action has to be taken soon," Mr. Pfotenhauer told a press briefing at MBA's National Secondary Market Conference.

Two issues stand in the way of passage, according to an MBA briefing paper. One is the size of the portfolios Fannie Mae and Freddie Mac would be allowed to hold, while the other concerns the creation of affordable housing funds paid for by fees imposed on the two secondary mortgage market institutions.

The MBA opposes the creation of statutory limits on the amount or types of investments the GSEs may hold in portfolio, as contained in the Senate's reform package. But the House bill would create affordable housing funds, which is something some members of the upper chamber detest.

Mr. Pfotenhauer, the MBA's senior vice president for government affairs, said there is too much that legislators do agree on to leave the effort on the table.

At the same time, he warned that if lawmakers don't find a common ground on the issues that divide them, the opportunity for passage may be lost indefinitely.

"What the GSEs do is invisible to most Americans and typically not understood by a broad section of legislators," he told reporters.

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