WASHINGTON – Oct. 14, 2011 – National Association of Realtors® (NAR) President-Elect and 2002 President of Florida Realtors Moe Veissi testified yesterday before a U.S. House subcommittee. He told lawmakers that owning a home has had long-standing government support in the U.S. because homeownership benefits individuals and families, strengthens communities, and is integral to the nation’s economy.
Veissi outlined NAR’s recommendations for housing finance reform before the House Financial Services Subcommittee on International Monetary Policy and Trade.
“We must be better stewards of the U.S. housing finance system if it is to thrive and effectively serve American homebuyers and mortgage investors into the future,” Veissi said. “Repairs to our current housing finance structure must be made, but we must be careful that changes … do not come at the expense of homeownership opportunities for middle- and lower income Americans.”
Toward that end, NAR supports H.R. 2413, the “Secondary Market Facility for Residential Mortgage Act of 2011,” introduced by Reps. Gary Miller, R-Calif., and Carolyn McCarthy, D-N.Y.
“H.R. 2413 offers a comprehensive strategy for reforming the secondary mortgage market and gives the federal government a continued role to ensure a consistent flow of mortgage credit in all markets and all economic conditions,” said Veissi. “Moreover, it supports the use of long-term fixed-rate mortgage products.”
Veissi testified that full privatization of the secondary mortgage market – largely Fannie Mae and Freddie Mac – would all but eliminate products like the 30-year fixed-rate mortgage. It would create higher mortgage interest rates and shut otherwise qualified buyers out of the market.
“The 30-year fixed-rate mortgage is the bedrock of the U.S. housing finance system,” Veissi testified. “Without government support, there’s no evidence that this type of mortgage would continue to exist. Private firms’ business strategies would focus on optimizing their profits (by) creating mortgage products that are more aligned with the goals of their business than in the best interests of … consumers.”
Veissi said that government’s participation in the mortgage market should decrease if private capital returns, but the federal government must continue to have a role in the secondary mortgage market.
“Continuing government participation in the secondary mortgage market is critical to ensure that qualified homebuyers can obtain safe and sound mortgage financing products even during market downturns, when private entities have historically pulled back,” Veissi said.
Recent reductions to conforming loan limits are already having an impact, according to early data from an NAR survey, which found that consumers above the new lower limit are must pay significantly higher interest rates and substantially larger downpayments.
“For hundreds of years, this country has understood the value of homeownership because it helps families build wealth, supports community stability and contributes to our economy,” Veissi said. “We need to make sure that future housing policies continue to reinforce our long-standing value of homeownership, for the future of our families and our country.”