Senate Banking Committee Republicans oppose FHFA proposal to purchase, guarantee second mortgages

U.S. Sens. Tim Scott (R-SC) and Bill Hagerty (R-TN) are among a group of lawmakers voicing their opposition to a proposal to purchase and guarantee single-family closed-end second mortgages.

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In a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson, the Congress members said the proposal will exacerbate inflation, disrupt the home equity lending and consumer credit markets, and increase risks to taxpayers. They also said it would not benefit many Americans who lack substantial home equity.”

“We are deeply concerned that the proposal is a thinly veiled attempt by the Biden administration to offset the effects of excessive fiscal spending and tight monetary policy as the November election approaches,” the Congress members wrote. “The sole purpose of the FHFA’s conservatorship of the GSEs is to restore their soundness and solvency so they can fulfill their statutory missions—under no circumstances should the FHFA’s ultimate authority as a conservator be exploited for political purposes. The GSEs are already the largest mortgage guarantors in the country; expanding their roles as consumer loan guarantors is a significant step in the wrong direction.”

The letter was signed by Scott, Hagerty, and every Republican on the Senate Banking Committee, along with 23 members of the House Financial Services Committee.

They concluded the letter by urging the Federal Housing Finance Agency (FHFA) to reject this proposal.