Industry News

House committee approves GSE reform bill

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A bill intended to prevent a repeat of the accounting and management scandals that shook Fannie Mae and Freddie Mac has been approved by the House Financial Services Committee, with a provision to create a $500 million-a-year affordable-housing fund intact. The committee approved the bill, HR 1427, Thursday in a 45 to 19 vote. But the affordable-housing fund could prove to be an obstacle to passage in the Senate, where a similar bill became bogged down last year. Rep. Ed Royce, D-Calif., warned the fund would be seen as a "poison pill provision" -- an idea rejected by committee Chairman Barney Frank, D-Mass., and Democrats who defeated Republican-backed amendments to remove it. If HR 1427 becomes law, Fannie and Freddie would contribute an amount equal to 1.2 basis points of their outstanding mortgages -- an estimated $500 million a year -- to the affordable-housing fund. Only 75 percent of the money would be used for affordable housing purposes, with the rest going to the federal go...