Public Proposals for the Future of the Housing Finance System

In this Friday, February 22, 2013, photo, a "sale pending" announcement sits atop a "for sale" sign in a home's yard in Richardson, Texas.

CAP Senior Fellow Janneke Ratcliffe testifies before the Senate Committee on Banking, Housing, and Urban Affairs. Read the full testimony (CAP Action)

We are here today to discuss not just the future of the housing finance system but also the future of housing and economic opportunity for Americans. As technical as this debate can be, we encourage you not to lose sight of the ultimate impact of the housing finance system on households, communities, and the economy. Research and our lived experiences confirm the link between housing and economic opportunity in this country, from the importance of decent and affordable rental housing and the many benefits of homeownership to the central role of the housing economy on economic vitality.

You’ve asked whether there is a bipartisan way forward on housing finance reform. There is. The Bipartisan Policy Center’s housing recommendations are based on a view shared across the political spectrum that homeownership is a desirable option when viable, and that those who do not buy a home ought to have access to affordable, quality rental housing. More specifically, this group agrees that the 30-year, fixed-rate product is the gold standard for a safe and sustainable mortgage market; that there is a critical need for a reformed multifamily finance system to meet the demand for affordable rental; and that the system must provide access to safe and affordable mortgages for all creditworthy borrowers, including those of low and moderate income.

At this point, the Bipartisan Policy Center’s reform plan is 1 of 18 proposals—including several bipartisan ones—that call for some explicit government support for the segment of the market traditionally served by the government-sponsored enterprises, while only a few plans propose no government role beyond FHA.

In other words, while a couple of outlier proposals still call for withdrawal of all support, we see a very broad consensus emerging. It is time to move on from this question because ironically, until we do so, the government will continue to provide a 100 percent guarantee for the vast majority of mortgages.

CAP Senior Fellow Janneke Ratcliffe testifies before the Senate Committee on Banking, Housing, and Urban Affairs. Read the full testimony (CAP Action)