Barr Presses FHFA Director on Risky Policy Changes

During a Committee on Financial Services hearing, I questioned Federal Housing Finance Agency (FHFA) Director Mel Watt on the agency’s decision to allow Fannie Mae and Freddie Mac to purchase mortgages with down payments as low as 3 percent. Similar government policies in the early 2000’s helped incent, cajole, and mandate financial institutions into loaning money to people to buy homes they could not afford to keep, and ultimately to a record $189 billion taxpayer-funded bailout. At the same time, the federal government’s Qualified Mortgage (QM) rules are limiting access to private mortgage capital. These policies will only grow Washington’s dominance of the housing market, making taxpayers the backstop for increasingly risky loans – a troubling echo of the events running up to the 2008 crisis. We cannot afford to repeat the mistakes of the past. The Portfolio Lending and Mortgage Access Act, which I introduced during the 113th Congress would expand the Qualified Mortgage (“QM”) safe harbor so that community banks would be empowered to make decisions on extending credit – rather than Washington bureaucrats. This legislation would encourage banks to compete for borrowers’ business, lowering costs and reducing taxpayers’ exposure to the increasingly risky investments being made at Fannie and Freddie.