WASHINGTON – Rep. Shelley Moore Capito (R-WV) today joined with House colleagues Spencer Bachus (R-AL) and Judy Biggert (R-IL) to introduce legislation – the Homeownership Protection and Housing Market Stabilization Act of 2008 – that would reform and modernize a troubled housing market that has been plagued by the ongoing credit crunch. 

“This problem is all-encompassing and I refuse to ignore needed reforms to an antiquated mortgage system,” said Capito.  “By reforming oversight of Government Sponsored Enterprises, promoting transparency in the mortgage process and enacting FHA modernization, this legislation will create clear cut reforms and improvements to a mortgage system that led to the current housing and credit crunch.”

The sweeping legislation introduced today would modernize the Federal Housing Administration (FHA) to enable federal housing administrators to better assist low and moderate income borrowers and expand access to stable mortgage options.  Modernization efforts would also provide the FHA with greater flexibility to assist a larger pool of homeowners.

“Many of the problems facing the housing market today were caused by unscrupulous mortgage originators and an out-dated framework that was not fully equipped to respond to new challenges,” noted Capito.  “This demands an overhaul of our mortgage origination system to restore consumer confidence and prevent this sort of crisis from reoccurring.  To that end, this legislation will reform the underlying impediments to a transparent housing market, enhance consumer protection and compliment the ongoing efforts to assist struggling homeowners.” 

The legislation also includes overdue upgrades in regulatory oversight of Government Sponsored Enterprises such as Fannie Mae, Freddie Mac and Federal Home Loan Banks – which play a significant role in the U.S. mortgage market. 

The measure would mandate a one-page mortgage summary to ensure that consumers fully understand the terms of their mortgage before closing on a new home.  It would also extend Community Reinvestment Act credit for foreclosure-prevention counseling and loan workouts to provide incentives for ongoing refinancing efforts. 

The measure includes language from a bill initially offered by Rep. Capito to temporarily raise loan limits for mortgages backed by the Department of Veterans Affairs.  

“When we passed the economic stimulus act earlier this year, the legislation failed to raise loan limits for our nation’s veterans,” noted Capito.  “This bill would correct that error and ensure that veterans have full access to mortgage assistance options under the VA.” 

In addition to the veteran provision, this bill includes language from Capito-sponsored legislation that would help protect appraiser independence and ensure the accuracy of property appraisals to combat property flipping schemes and unjustifiably overpriced homes.  In recent years, inaccurate appraisals created a scenario where some homeowners found themselves with mortgage obligations that were worth more than their home. 

Capito is the Ranking Member on the House Financial Services Subcommittee on Housing and Community Opportunity.

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