WASHINGTON - Congressman Andy Barr released the following regarding yesterday’s passage by the Financial Services Committee of H.R. 2767, The Protecting American Taxpayers and Homeowners Act (PATH Act), legislation to end taxpayer-funded bailouts of Fannie Mae and Freddie Mac and create a sustainable housing finance system for America.
“Today we took decisive action to build a responsible housing finance system because hardworking Kentucky taxpayers must never again be asked to bail out banks and corrupt government enterprises like Fannie Mae and Freddie Mac,” said Congressman Barr. “I am very pleased that the PATH Act includes my provision that will fix the current, broken system by expanding portfolio lending and increasing access to mortgage credit.”
“The PATH Act creates a housing finance system that’s sustainable for homeowners, respectful for hardworking taxpayers, and built to last,” said House Financial Services Committee Chairman Jeb Hensarling (R-TX). “Representative Barr offered key provisions to make the PATH Act even stronger by protecting lenders who make good loans and hold them on their books from the most burdensome parts of the Dodd-Frank Act.”
Barr continued, “My provision helps Kentuckians responsibly gain access to the credit they need to purchase a home by giving the discretion and judgment back to the local community bankers who are better positioned than unaccountable Washington bureaucrats to judge their neighbors’ character and creditworthiness.”
When a lender keeps a loan in their portfolio, the lender holds the risk of a borrower’s default. In such a case, the presumption should inherently exist that the lender believes that the borrower has the ability to repay, and therefore the lender should not be subject to increased legal liability provisions in Dodd-Frank.
The PATH Act also:
Ends the taxpayer-funded bailout of Fannie Mae and Freddie Mac and phases out the troubled Government-Sponsored Enterprises within five years.
Increases competition by ending the federal government’s domination of the housing finance market that has left taxpayers liable for $5.1 trillion in mortgage guarantees.
Gives consumers more choices in determining which mortgage product best suits their needs.
Includes provision based on legislation authored by Congressman Barr, H.R. 2673, the Portfolio Lending and Mortgage Access Act, which provides that residential mortgage loans held in portfolio by the loan originator are considered a “Qualified Mortgage” and therefore satisfy the ability to repay requirement in Dodd-Frank.