Sustainable Homeownership Act
Sponsored By: Representative Fitzgerald, Scott [R-WI-5]
Introduced
Summary
Limits risky mortgage exposure and forces private risk‑sharing for Fannie Mae and Freddie Mac. It would cap certain asset holdings, require private insurer guarantees on high‑loan‑to‑value loans, and dedicate some enterprise proceeds to deficit reduction or housing supply.
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- Families and borrowers: Restricts enterprise purchases of mortgages with unpaid balances above 80% of value and limits refinances over 97% of value except when the new loan cuts payments, shortens the term, or converts variable to fixed for at least 60 months.
- Enterprises (Fannie Mae and Freddie Mac): Requires private insurer guarantees on the portion of loans above 80% with tiered minimums, bans pricing differences by seller size, and limits "covered assets" to the greater of 8% of total assets or a Treasury and FHFA set amount.
- Treasury and regulators: Lets the Treasury convert senior preferred stock to common and exercise warrants. The FHFA must set capital standards in 90 days and warrants‑derived stock must be sold within 2 years.
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 2 benefits, 0 costs, 4 mixed.
Higher mortgage insurance for high‑LTV loans
If enacted, the bill would require private insurance or guarantees on any mortgage amount above 80% of a home's value. The law would set banded minimums by LTV: about 12% for 80–85%, 25% for 85–90%, 30% for 90–95%, and 35% for 95–97% of the excess (with lower minima for some fixed‑rate loans and state program purchases). The FHFA Director could allow a 25% option for some low‑income borrowers (household income at or below 80% of AMI). Loans over 97% could be bought only in a narrow refinance case when a prior mortgage on the same property was replaced within 30 days and the new loan lowers payments, shortens amortization, or converts to a fixed, fully amortizing term of at least 60 months. These mortgage purchase and coverage rules would start 180 days after enactment.
New capital, risk transfer, and exit rules
If enacted, the FHFA Director and the Treasury would implement a package of capital, fees, and conservatorship exit rules for the enterprises. The Director would set capital standards needed for exit within 90 days and could require stock sales or other actions if capital is insufficient. The Secretary would set an annual commitment fee in consultation with the Director and Treasury could convert preferred stock and exercise warrants, with warrant‑derived stock sold within 2 years. The Director must also require that enterprises transfer most single‑family credit risk no later than 2 years, and adopt risk‑based capital rules aligned to mortgage risk. The Director could expand what counts as core capital and limit dividends when core capital falls below required minimums.
Equal mortgage purchase terms for sellers
If enacted, each enterprise would have to offer to buy eligible single‑family mortgages on substantially similar cash terms from any approved seller. Sellers must be approved and loans must meet underwriting rules. The enterprises would also be barred from charging different prices or contract terms based on a seller's size, charter type, or sale volume. These rules would take effect 180 days after enactment.
Limit on GSE on‑balance mortgage holdings
If enacted, each enterprise's covered assets would be capped at the larger of 8% of its total assets or a dollar amount set quarterly by the Treasury Secretary and the FHFA Director as needed for securitization and liquidity. "Covered assets" would include mortgages and mortgage‑related securities but would exclude loans for construction of residential dwellings. The cap would take effect 180 days after enactment.
Enterprise proceeds for deficit or housing
If enacted, funds or proceeds from enterprise asset sales or dedicated enterprise receipts would be required to go either to deficit reduction or to support housing supply initiatives. Housing supply initiatives would include affordable and middle‑income housing as defined by the Treasury Secretary. This change would take effect on the date of enactment.
Longer public review for new products
If enacted, the public comment period for new enterprise products or activities would increase from 30 days to 60 days, and the FHFA Director could add another 30 days. The Director would have to publish non‑proprietary decision details within 30 days and issue or revise rules within 90 days of enactment. These steps would increase transparency for new enterprise actions.
Sponsors & CoSponsors
Sponsor
Fitzgerald, Scott [R-WI-5]
WI • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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