What: All Issues : Aid to Less Advantaged People, at Home & Abroad : America's Poor : Federal housing finance overhaul (H.R. 1427)/ Rep. Jeb Hensarling (R-Texas) amendment to suspend contributions to the affordable housing fund if the payments contribute to an increase in mortgage costs (2007 house Roll Call 379)
 Who: All Members : New York, District 2 : King, Pete
[POW!]
 
Federal housing finance overhaul (H.R. 1427)/ Rep. Jeb Hensarling (R-Texas) amendment to suspend contributions to the affordable housing fund if the payments contribute to an increase in mortgage costs
house Roll Call 379     May 17, 2007
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This vote was on an amendment to a bill to create a new independent agency to oversee the workings of Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, the federally chartered organizations that support the home mortgage market. In addition to creating the Federal Housing Finance Agency, the legislation would also create a new stream of funding for affordable housing programs funded by contributions by Fannie Mae and Freddie Mac. This amendment, proposed by Rep. Jeb Hensarling (R-Texas), would have suspended Fannie Mae and Freddie Mac's contributions to the affordable housing fund if the payments were to contribute to an increase in mortgage costs.

Republicans believed that the creation of the affordable housing fund was a backdoor tax on mortgage holders by increasing the costs of Fannie Mae and Freddie Mac, which would fund the program under the legislation.

"Earlier this evening the chairman said that he believes that this will be paid by the shareholders," Hensarling said of Financial Services Chairman Barney Frank's (D-Mass.) previous remarks. "We believe on this side of the aisle that, due to the duopoly power, the Fannie and Freddie, that they already control roughly 80 percent of the market in which they operate, that a substantial portion of the cost of the so-called affordable housing Fund will, indeed, be imposed upon homeowners in the form of higher mortgages, indeed, functionally a mortgage tax, a new mortgage tax on the American people."

Hensarling said that his amendment would have no effect if what Frank asserted were correct. But if Fannie Mae and Freddie Mac's contributions to the housing fund have "an adverse impact upon the cost of housing in America, that mortgages rise, that the program will be terminated," Hensarling said.

Frank replied that Hensarling's amendment was simply another Republican attempt to "kill the fund, this time by obfuscation." (See also Roll Call 378.)

"There are people who do not believe that the federal government should be encouraging the construction of affordable housing, and understand that however we propose to do it, they will object to it," Frank continued. "If we try to do it through appropriations, that will be a problem because of the deficit. Here we try to do it by taking, we believe, essentially from the profits of Fannie Mae and Freddie Mac."

Frank also took issue with Hensarling's assertion that Fannie Mae and Freddie Mac constitute a government-sanctioned duopoly. "At one point it might have been. In fact, today, the securitization market is far more competitive," Frank concluded. "There are significant private competitors to Fannie Mae and Freddie Mac. The notion that Fannie Mae and Freddie Mac can raise prices at will does not seem to me to reflect economic reality."

In the end, the House sided with Frank. Democrats were unanimous in their opposition, and 27 Republicans joined them in opposing the amendment. Thus, by a vote of 164 to 253, the House rejected a proposal to suspend contributions to the affordable housing fund if regulators determined that the program was increasing the price of mortgages, and a bill to reform Fannie Mae and Freddie Mac went forward with the affordable housing fund intact.

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