A Senate bill to overhaul the U.S. mortgage-finance system would devote billions of dollars to boosting home ownership among lower-income borrowers, according to a recent draft obtained by Bloomberg News. For some left-leaning lawmakers, that won't be enough.
The draft, the product of discussions between Tennessee Republican Bob Corker and Virginia Democrat Mark Warner, gives the clearest view yet into how the senators aim to woo progressive politicians to back their plan for addressing mortgage-giants Fannie Mae and Freddie Mac. Support from those Democrats is likely needed to meet the 60-vote threshold for passing major bills in the Senate.
Corker and Warner would levy a "market access fee" on new loans. That money would be used to help build affordable rental housing and make buying homes cheaper for low- and moderate-income borrowers, according to the draft.
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That approach is being met with skepticism by some affordable housing groups. They say other parts of the proposal make it uncertain that lower-income borrowers would get as much support as they get in the current system. If the authors move to appease those critics, they could lose Republicans who want the government's involvement in the mortgage market to be reduced if not eliminated.
Micah Johnson, a spokeswoman for Corker, said the draft obtained by Bloomberg "is not current or complete. Discussions are ongoing and nothing has been finalized."
"We continue to have productive discussions about the appropriate path forward," Corker said in a statement through the spokeswoman. "I am hopeful we will be able to reach consensus on legislation that will scale back the government's role in housing finance and protect taxpayers from future economic downturns."
Warner spokeswoman Rachel Cohen said in an email that "to get his support, any proposal would have to have strong affordability provisions, including enhanced assistance for first-time homebuyers."
Fannie and Freddie, which have been under the federal government's control since the 2008 financial crisis, don't make loans. They buy them from lenders, wrap them into securities and make guarantees to investors in case the mortgages default. That process gives lenders money to keep making loans, while the guarantees keep down interest rates.
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