Housing Finance Policy Faces Tough Issues

Like the future of Government Sponsored Enterprises, the application of section 941 could have an impact on the terms of financing for home buyers. Courtesy of Costa Rica Real Estate

A number of housing-related finance policy issues could take the forefront in 2011. The administration has indicated that by the end of January it will publish proposals dealing with the future roles and forms of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac. This debate is critical in determining the types of mortgage financing available to home buyers.

Final regulations for the Dodd-Frank financial reform law will be under review in 2011. For mortgages, an important element is the section 941 Credit Risk Retention rules. HUD and FHFA will be issuing proposed rules on the new requirements, which include rules that securitizers retain an economic stake of at least 5 percent of the credit risk they originate. However, the law allows an exception for qualified residential mortgages, the definition of which will need to be fleshed out by regulation.

- Courtesy of NAHB