We are still waiting to see what reforms will be presented in the overdue mortgage finance overhaul.
The Dodd-Frank Bill is expected to include reforms to reduce the federal government’s large roll in the mortgage insurance industry. As of now, the government backs 90% of all new mortgages in the United States. Such a large share of the market poses risks for United State taxpayers in the event of another crash or mass defaults on all of those government-backed mortgages.
Knowing this, it is hard to argue that the government’s role in mortgage backing needs to be diminished and that’s what most experts expect from the Dodd-Frank Bill, which is what everyone is waiting for. Regardless of political party affiliation and economic opinion, most experts believe that the government’s role in mortgage backing has grown too large. The debate comes down to the size of the role it should play. Experts are predicting a five-year plan that will cut the government’s share from 90% to just 50%. What everyone can agree on is that whatever plans are put in place, reducing the government’s share too quickly or drastically could cause a catastrophic turn for the country’s housing market.
It is reported that the Treasury is expected to release on the future of housing financing. Some predictions include a reduced maximum loan limit along with an increased focus on rental housing.