Reps. John Delaney, D-Md., John Carney, D-Del., and Jim Himes, D-Conn., introduced a new housing finance bill Thursday designed to provide an explicit government backstop for the market, while increasing private sector participation.
The three Democrats first highlighted their plan in January. Back then, lawmakers in both the House and Senate were actively debating a set of competing bills on a housing finance structure to replace government-sponsored enterprises Fannie Mae and Freddie Mac.
The fight over mortgage finance reform has since lost steam, especially after key senators opposed a bipartisan bill authored by Sens. Tim Johnson, D-S.D., and Michael Crapo, R-Idaho. Their bill passed the Senate Banking Committee, but failed to attract the overwhelming support likely needed to advance to the full Senate.
But the three House lawmakers say there is still need for a plan that can bridge the ongoing political divide over how to reform the mortgage finance system.
"By maintaining a government guarantee, introducing private sector pricing and increased taxpayer protections, our legislation can bring both sides of the aisle together," Delaney said in a press release.
"Neither side has a monopoly on good ideas and I look forward to working with my colleagues and stakeholder groups so that we can stabilize the housing finance market for decades to come."
Their bill would create an insurance program through Ginnie Mae to back the mortgage market. The private sector would take a 5% first-loss position on guaranteed mortgage-backed securities, with the remaining 95% shared between Ginnie Mae and a private reinsurer.
The three Democrats told reporters Thursday that they plan to continue to discuss the bill with Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee, and other lawmakers. The measure has attracted six additional Democratic cosponsors.
"This legislation ensures that new homeowners will continue to have access to the affordable, predictable financing options they need, while protecting taxpayers and our economy from future downturns," Himes said in the release.
"Our bill combines the market’s efficiency in pricing risk with government's ability to provide scale to create a safer, more liquid housing market that preserves access to affordable housing for American families."