WASHINGTON, D.C. – October 31, 2013 – (RealEstateRama) — The non-partisan, independent Congressional Budget Office (CBO) reports the Protecting American Taxpayers and Homeowners Act (PATH Act) that the House Financial Services Committee passed in July will slash the federal budget deficit by $5.7 billion over the next 10 years.
“The PATH Act not only ends the bailouts of Fannie Mae, Freddie Mac and FHA, preserves the 30-year fixed mortgage and helps consumers buy homes they can afford to keep, CBO reports it also cuts our budget deficit by $5.7 billion,” said Chairman Jeb Hensarling (R-TX). “That makes the PATH Act truly a win-win for hardworking taxpayers, homeowners and America’s economy.”
The PATH Act, H.R. 2767, was introduced by Rep. Scott Garrett (R-NJ) on July 22.
The bill, which currently has 48 co-sponsors, puts private capital – instead of taxpayers’ dollars – at the center of the mortgage system. It gives homebuyers more informed choices and options about what mortgage product best suits their needs – instead of unaccountable Washington bureaucrats deciding what mortgage Americans can or cannot get.
Specifically, the PATH Act:
Responsibly phases out Fannie Mae and Freddie Mac over five to seven years. These taxpayer-backed corporations played a central role in causing the 2008 financial crisis and taxpayers were forced to provide Fannie and Freddie with a nearly $200 billion bailout. The PATH Act permanently ends their bailout.
Strengthens and protects the FHA by giving it tools to tackle its solvency crisis and by giving it a specific mission to serve first-time homebuyers and those with low-to-moderate incomes.
Expressly preserves the 30-year fixed-rate mortgage. Section 213 of the PATH Act (.pdf) specifically states that the “FHA shall provide, among other mortgage insurance products, for the availability of a 30-year fixed-rate mortgage.” Under the PATH Act, the FHA would be required — for the first time — to offer a 30-year fixed-rate mortgage insurance product.
Reduces government control of the mortgage market by removing artificial barriers to private investment capital.
Repeals Dodd-Frank Act regulations that are harming community banks and credit unions and making it more difficult for middle income Americans to buy homes they can afford to keep.
“The PATH Act gives America the sustainable housing finance system we need – sustainable for homeowners so they buy homes they can actually afford to keep, sustainable for taxpayers so they never again have to bail out Washington’s failed housing programs, and sustainable for our economy so we avoid future cycles of boom, bust and bailout,” Chairman Hensarling. “Confirmation from the CBO that the PATH Act also helps drive down our budget deficit is yet another reason why Republicans and Democrats should work together to get it signed into law.”