As anticipated, Financial Services Committee Chairman Jeb Hensarling has released a broad and aggressive proposal addressing a number of issues relating to housing finance - "The Protecting American Taxpayers and Homeowners (PATH) Act."
In addition to phasing out Fannie and Freddie, and refocusing the mission of the FHA, the proposal contains significant regulatory relief in the mortgage lending arena. The Committee release and Executive Summary provides significant additional information.
Additionally, IBAT issued a statement regarding the proposal, applauding the inclusion of meaningful reforms to stifling regulatory burden on mortgage lending, with a focus on in-portfolio lending. For in-portfolio loans, the ability-to-repay, escrow requirements and several other provisions are eliminated. Further, for all mortgage loans, the Dodd-Frank high-cost definition, prohibition on balloon payments, ability-to-repay as a defense to foreclosure, prohibition on arbitration and other requirements go away.
This will clearly be a long and arduous process, and IBAT will continue to be highly engaged with the Chairman, other members of Congress and Committee staff as we attempt to work through these critical issues.