WASHINGTON — A bill to overhaul mortgage finance giants Fannie Mae and Freddie Mac won approval Thursday from a divided Senate Banking Committee and moved on to an uncertain future.
On a 13-9 vote, the committee advanced a bipartisan compromise bill that experts welcomed as a real attempt to revamp mortgage finance and get Fannie and Freddie out of conservatorship. They’d be phased out and replaced by a government reinsurance program to backstop mortgage lending.
The legislation’s future is uncertain because it passed without enough votes to force a vote on the full floor of the Senate. Seven Republicans voted for the bill, which was crafted by the top committee leaders from each party, but six Democrats voted against it, concerned that the compromise would work against low-income homebuyers.
And the chairman of the House Financial Services Committee, which passed a more radical bill almost a year ago, issued a statement effectively suggesting the Senate’s measure is dead on arrival there.
“The window for action this year is quickly closing, and I fear it may already be too late during this Congress with an already full agenda to get meaningful reform bills through both chambers,” said Rep. Jeb Hensarling, R-Texas, accusing Senate Democrats of “controversial and irresponsible politicization” of mortgage finance.
Why so much attention on a bill with a doubtful future? The mortgage market is estimated to be above $10 trillion, so the status quo is not a viable option for too much longer.
Uncertainty about how mortgage lending will operate in the future is thought to weigh on banks and borrowers. And this is what the legislation seeks to reverse.