The Protecting American Taxpayers and Homeowners (PATH) Act of 2013, introduced by Reps. Scott Garrett (R-NJ) and Jeb Hensarling (R-TX), would create a sustainable housing finance system.  Specifically, the legislation would dissolve Fannie Mae and Freddie Mac, reform the  Federal Housing Administration (FHA), provide regulatory relief from Dodd-Frank, and create the National Mortgage Market Utility (NMMU).  The NMMU would not receive any federal government guarantees and participation is voluntary.

The Heritage Foundation explains the PATH Act “is a substantial step toward real, market-based reform of housing finance” that would “help both homeowners and taxpayers.”  The bill marks a turning point in how Washington views the role of the government in housing finance:

“Congressional leaders made the mistake of creating Fannie Mae and Freddie Mac and subsidizing their activity in these markets through special access to federal funds and an implicit federal backing prior to federal conservatorship in 2008. It is time that these same leaders wind down these enterprises and establish a U.S. housing finance market free of the distortions that this institutional arrangement creates.”

Few entities were more responsible for the collapses of the financial system than Fannie Mae and Freddie Mac.  They represent a failed institutional model that allowed them to rake in profits during periods of growth, while shielding them from losses.  In fact, taxpayers spent $190 billion to bailout the agencies during the midst of the financial crisis.  Today, the federal government underwrites more than 90 percent of all new mortgage originations and mortgage securitizations.  The PATH Act would change the current system, in which “Washington elites decide who can qualify for a mortgage, and where hardworking taxpayers who struggle to pay their own mortgages are forced to pay for somebody else’s while they are continually on the hook for $5 trillion in mortgage guarantees.”

Heritage explains that as Washington pulls back, consumers will have more choice:

“The plan would additionally provide relief to banks and mortgages securitized through the NMMU from certain regulations in the Dodd–Frank Act that limit options for consumers and community banks to compete more robustly in the mortgage lending market. The relief from financial and mortgage-related regulations in the Dodd–Frank Act—and the temporary relief from the capital rules in the Basel III Accord—would provide some level of certainty for private capital to return to U.S. financial markets.”

Heritage Action encourages lawmakers to co-sponsor the PATH Act, which is a solid conservative solution to one of our nation’s most pressing problems.

Heritage Action supports the PATH Act (H.R.2767) and will include CO-SPONSORSHIP of this legislation on our legislative scorecard. 

Related links:
Heritage Action Scorecard
Heritage Action Supports the PATH Act
Big Government Special Interests Oppose the PATH Act
Heritage: A Welcome Step Toward Solving the Fannie and Freddie Mess
The Beginning of the End for Fannie and Freddie