NAHB Seeks Changes to the PATH ActJuly 19th, 2013 by DWM Magazine
In an effort to maintain a strong and liquid housing finance system, the National Association of Home Builders (NAHB) told Congress yesterday that it will work with lawmakers to make changes to the Protecting American Taxpayers and Homeowners (PATH) Act.
Testifying before the House Financial Services Committee, NAHB CEO Jerry Howard urged the committee to modify the PATH Act to make sure that the federal government continues to provide a backstop for a reliable and adequate flow of affordable housing credit in all economic and financial conditions.
“NAHB believes federal support is particularly important to ensure that 30-year, fixed-rate mortgages, the bedrock of the nation’s housing finance system since the 1930s, remain available at reasonable interest rates and terms,” said Howard. “As currently drafted, the PATH Act does not provide the federal support necessary to ensure a strong and liquid housing finance system, and we urge the committee to make the necessary changes.”
NAHB has recommended to the committee that Fannie Mae and Freddie Mac be gradually phased into a private-sector-oriented system, where the federal government’s role is explicit but its exposure is limited. Federal support would be limited to catastrophic situations where carefully calibrated levels of private capital and insurance reserves would be depleted before any public funds were employed to shore up the mortgage market.
NAHB also urged House lawmakers to modify the sections of the bill outlining changes to the Federal Housing Administration (FHA).
“The PATH Act would drastically diminish FHA’s vital liquidity mission,” said Howard. “By simultaneously leaving all federal support for housing to FHA, and then by greatly reducing the overall scope and reach of FHA’s programs, the PATH Act would greatly limit homeownership and rental housing opportunities for many financially responsible and qualified Americans.
“At a time when housing is just starting to get back on its feet and provide job and economic growth, we don’t want to do anything that would reverse this positive momentum,” he added. “It’s definitely important that Congress be mindful of housing’s important role in the economy going forward.”