Plan includes ‘winding down’ , national mortgage standards
By Bob Berwyn
SUMMIT COUNTY — The U.S. Treasury Department.this week unveiled a plan to overhaul the housing finance market, including national standards for mortgage servicing and, most importantly, getting rid of Fannie Mae and Freddie Mac to “shrink the government’s current footprint in housing finance on a responsible timeline,” according to a press release from the
“This is a plan for fundamental reform – to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it,” said Treasury Secretary Tim Geithner. “We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market.”
The suggested changes are included in a report issued by the Obama administration, along with the intention to have a dialogue with Congress about the appropriate role of government in the long-term.
Local Realtor Art Girten said most of the planned reforms, including a requirement for all mortgage brokers to be licensed, make sense. One area that caught his attention had to do with limitations on owner financing.
Girten said any potential changes would probably be tweaked at the state level by the Colorado Real Estate Commission, with the proviso that state rules be more stringent than federal requirements.
The report also includes provisions for stronger capital standards that would help banks better withstand future downturns and declines in home prices without jeopardizing the health of the economy.
Options for reforming the Federal Housing Authority could include lowering the maximum loan-to-value ratios for qualifying mortgages.
Another section addresses the availability of credit in all communities, including rural areas and economically distressed regions.
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