November 19, 2014


WASHINGTON Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a Federal Housing Finance Agency (FHFA) hearing titled “The Federal Housing Finance Agency: Balancing Stability, Growth, and Affordability in the Mortgage Market.”
Below is Chairman Johnson’s statement as prepared for delivery:
“I call this hearing to order. Welcome back to the Committee, Director Watt.  Since this is likely my last hearing regarding the GSEs, I would like to urge my colleagues to continue our hard work to move past the housing crisis.  Over the past few years, we and our staffs have spent countless hours wrestling with possible solutions and pitfalls.  Some options are not practical while others are too ideological, but we still need to find a solution.  
“The Enterprises remain trapped in conservatorship today.  FHFA continues to perform the dual role of both regulating and running the businesses of the largest entities in the mortgage market.  This is not sustainable, and there is no consensus in Congress regarding how to move forward.
“All the while the credit box remains extremely narrow, locking out many potential borrowers with good credit, including first-time homebuyers who are needed to expand and sustain our recovery.  While I oppose returning to exotic products with confusing terms, we need to find a way to bring the pendulum back to rational underwriting.  Unfortunately, the tight credit conditions will remain a challenge while the future structure of the mortgage market is uncertain. 
“FHFA, under Director Watt’s guidance, is taking steps to provide more certainty to the market and expand access for borrowers.  These initiatives include expanding the loan-to-value requirements from 95 LTV to 97 LTV, updating reps-and-warrants frameworks, and developing Neighborhood Stabilization Initiative pilot programs in Detroit and Chicago.
“I applaud Director Watt and his team at FHFA for taking steps to stabilize the Enterprises and the housing market.  Focusing the common securitization platform on the Enterprises, exploring a single security to increase liquidity, and developing stronger counterparty oversight are all efforts that will help stabilize the market for the future.  However, there is only so much that can be accomplished while the Enterprises are in limbo. 
“Everyone agrees that conservatorship cannot continue forever, so I hope my colleagues will keep working towards a more certain future for the housing market.  However, if Congress cannot agree on a smooth, more certain path forward, I urge you, Director Watt, to engage the Treasury Department in talks to end the conservatorship. 
“Before I finish, I want to thank my colleagues on this Committee, as well as their staffs and my staff, for all their hard work on housing finance reform.  I especially want to thank Ranking Member Crapo and his staff for their faithful partnership.”