A House Financial Services Subcommittee Wednesday approved eight separate bills to reform and downsize Fannie Mae and Freddie Mae.
Two of the bills set a multi-year schedule for the GSEs to reduce their giant mortgage portfolios and raise loan guarantee fees.
The bill sponsored by Rep. Jeb Hensarling, R-Tex., would cap Fannie and Freddie's portfolios at $700 billion one year after enactment. Over the next four years their portfolios would be reduced to $250 billion in size each.
A measure introduced by Rep. Randy Neugebauer, R-Tex., requires the GSE regulator to start raising guarantee fees immediately after enactment. Within two years, the guarantee fees should reflect the risks of potential loan losses and capital costs in the private sector.
During a hearing on the bills, the GSE regulator testified that Federal Housing Finance Agency has been gradually raising g-fees so riskier mortgages are charged at a higher price. FHFA also is considering "what is the appropriate amount of economic capital that would be required to back those loans if they were operating as private entities," said acting agency director Edward DeMarco.
Housing groups, such as the Financial Services Roundtable, noted that the g-fees are more accurately priced today and additional increases should be phased-in over time to avoid any disruption to the housing recovery.
As passed, the Neugebauer bill allows FHFA to consider market conditions before raising g-fees to ensure its actions don't disrupt the housing recovery.
