November 7, 2013
WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “Housing Finance Reform: Essential Elements to Provide Affordable Options for Housing.”
Below is Chairman Johnson’s statement as prepared for delivery:
“I call this hearing to order.
“Today, with the help of our witnesses, the Committee will examine the importance of affordability in the housing finance system for both homeowners and renters. It is imperative that any new system meets the housing needs for all Americans, and this morning we will explore the well-functioning elements of the current system that should be maintained to provide renters, low-and-moderate income families and those who live in rural areas affordable options for housing.
“Currently, Fannie Mae and Freddie Mac support affordable financing for multifamily lending and, prior to being placed in conservatorship, were authorized to provide funding for the Housing Trust Fund and Capital Magnet Fund to further target support for affordable housing to those families that need it the most. In addition, Fannie Mae and Freddie Mac’s mission is to ensure a liquid market and stable access to mortgage credit in all communities, including rural and underserved markets. This mission cannot be scrapped in a new system.
“As we consider winding down Fannie Mae and Freddie Mac and transitioning to a new structure, we must consider what worked and did not work in the old system, and how the roles currently filled by the GSEs will be replaced in a new system. While those who are opposed to the GSEs’ affordable housing goals often link the goals – last increased for the single-family market by the Bush Administration in 2004 – to the problems experienced in the housing market, even Dr. Holtz-Eakin’s dissenting view in the Financial Crisis Inquiry Commission report found that the problems were complicated rather than solely focused on the GSEs. And research conducted by the St. Louis Federal Reserve Bank determined that the affordable housing goals were not the cause of the subprime mortgage boom.
“According to a recent report by the Harvard Joint Center for Housing Studies, homeownership is at its lowest level since 1976 for those ages 25 to 54. The statistics are equally troubling for affordable rental properties. As the homeownership rate decreased during the crisis, the demand for the rentals stock exceeded the supply and the number of rent burdened families increased as the supply of vacant rental housing declined to the lowest percentage since 2001. Without a new system that includes a duty to serve all areas of the country, I am concerned these levels could fall further and at the expense of rural and traditionally underserved markets like those in my home state.
“I look forward to hearing our witnesses’ recommendations to maintain and increase access to housing options that are affordable and to ensure that all communities are served by any new secondary market structure.”