Senate Banking Committee passes housing finance bill

May 15, 2014, Fairfax, Va.—Americans for Limited Government President Nathan Mehrens today issued the following statement in opposition to S. 1217, the “Housing Finance Reform and Taxpayer Protection Act of 2013,” that passed out of the Senate Banking Committee, particularly its provision that “The full faith and credit of the United States is pledged to the payment of all amounts from the Mortgage Insurance Fund which may be required to be paid under any insurance provided under this title”:

“At the heart of the financial crisis was the federal government’s implicit guarantee of mortgages to lenders. That guarantee ensured if the debts went bad, taxpayers or the central bank would step in to cover the losses. The Johnson-Crapo bill doubles down on this mistake that encouraged risky lending, making explicit a guarantee that taxpayers were previously promised they would never have to cover in the first place. Incredibly, supporters of the legislation claim it somehow protects taxpayers. Nothing could be further from the truth, as it puts the full faith and credit of the U.S. government at risk — again.

“Moreover, the legislation contemplates a mortgage insurance fund for all conventional mortgages that lenders would be required to pay into — costs that will undoubtedly be passed along to borrowers. Therefore, whether via personal mortgage insurance premiums or higher closing costs, even if borrowers put 20 percent down, under the Senate bill they should plan on paying even more to own a home.

“The Senate should reject the flawed Johnson-Crapo approach, which neither reforms housing finance nor protects taxpayers. It cannot truly create a private market for housing finance when the Treasury and taxpayers are still on the hook.”


“Is Congress planning to charge you mortgage insurance even if you put 20 percent down?” by ALG senior editor Robert Romano, March 12, 2014 at

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