The new platform of the Republican Party calls for downsizing the Federal Housing Administration mortgage insurance program and winding down the “size and scope” of Fannie Mae and Freddie Mac’s secondary market activities.
“The FHA, which tripled in size to more than $1 trillion under the current administration, has crowded out the private sector and is at risk of requiring a taxpayer bailout,” says the GOP platform statement released midweek in Tampa. “It must be downsized and limited to helping first-time homeowners and low- and moderate-income borrowers.”
But the GOP statement of principles offers no specifics on how Fannie and Freddie should be “wound down.”
America Enterprise Institute resident fellow Edward Pinto told National Mortgage News that House Republicans have approved a fiscal year 2013 budget that calls for placing a cap on GSE loan limits. (Pinto is at the convention.)
“Such a policy would reduce the number of loans the entities could back, naturally shrinking their market share,” the budget document says.
Pinto noted that it would take an act of Congress to reduce Fannie and Freddie’s loan limit.
He and two of his AEI colleagues have recommended a gradual reduction in the GSEs’ loan limits, currently capped at $625,500.
“Fannie and Freddie’s loan limits should be reduced over time. This will lead to them being phased out so that the private sector can take on more of the secondary market as the GSEs withdraw,” Pinto said. “That will lead to a solid robust housing market,” he added.
On the MID:
In a series of ads in Tampa this week, the National Association of Home Builders has been trying to send a message about the real estate industry’s clout to convention-goers. “The road to the White House will be a driveway,” read one ad, which appeared in a special Tampa edition of The Hill. “Housing = Jobs.”
In big letters, the ad cited polling research that found that 68% of voters would be less likely to vote for a candidate who proposed eliminating the mortgage interest deduction.
While Romney has vowed to maintain the deduction, he reportedly has also told donors that he would limit its application on second homes, and he would also limit the deduction for state and local property taxes.
The Republican Party platform, released Tuesday, did not contain language that was included in the party’s 2008 platform about the value of preserving the mortgage interest deduction. The decision to exclude that language reportedly came after former Sen. Jim Talent, a Romney adviser, argued that specific provisions on the tax code would get in the way of a budget deal.