“The proposed Johnson-Crapo bill provides the best chance to overhaul the mortgage finance system this decade,” President Barack Obama’s top housing official said this week. “We must take action, “The U.S. Housing and Urban Development Secretary said at a conference hosted by the National Council of La Raza and other civil rights and housing groups.
Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) / and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) – Campaign against Johnson-Crapo bill
Last month, US Senators Tim Johnson and Mike Crapo made a new proposal for reforming the US mortgage industry that falls in line with last year’s proposal from Bob Corker and Mark Warner. The proposal would set up a system of private companies that release a common security, much like how Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) / and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) sell securitized mortgages under the current system.
Moreover, the supposed reform would require the issuers that get the new guarantees to raise a capital level of 10% against the value of their mortgage loans and would take that much in losses before taxpayers were on the hook. The legislation proposed by Johnson and Crapo is widely seen as President Obama’s favorite plan to reform the U.S. housing market.