Home-Loan Reform Hits a Snag
Republicans pledged to go after Fannie and Freddie, but will they?


Andrew Stiles

When the House returns from recess next week, lawmakers will have just a matter of days to come to an agreement on federal spending for fiscal year 2012. A continuing resolution passed last month is set to expire on November 18, and there are still a number of highly controversial issues — the amount of “emergency” disaster funding, for example — that must be resolved before the deadline, not least of which is a Senate-passed measure that would raise the limit on the size of mortgages that housing giants Fannie Mae and Freddie Mac are allowed to guarantee. If House Republicans ultimately decide to go along with the provision, they could risk violating their much-heralded “Pledge to America,” the election-year manifesto that helped guide them to victory in 2010.

The measure, which raises the mortgage limit from $625,500 to $729,750, recently passed the Senate by a vote of 60–38. It is nothing new. Rather, the vote was simply to extend an increase first proposed in 2008 as a temporary fix in response to the housing crisis. Since then, however, Congress has voted to extend the “temporary” increase three times, including once as part of the 2009 stimulus package. The most recent extension expired at the end of September.

Eight GOP senators backed the extension, which was co-sponsored by Sen. Johnny Isakson (R., Ga.). The Republican-controlled House, meanwhile, already voted earlier this year to reject the measure. In each case, the measure was considered as part of housing-appropriations legislation, which both chambers have now passed. It is now the task of a bicameral conference committee to iron out the differences.

There is some support for the measure in the House GOP conference, mostly consisting of lawmakers representing wealthier coastal states with the higher home prices most likely to be affected by an extension (or lack thereof) of the limit increase. Reps. John Campbell (R., Calif.) and Gary Miller (R., Calif.), for example, have urged Republican leaders to support the extension, arguing that the housing market remains too vulnerable to limit federal support at this time. Campbell said in a recent interview with Roll Call that if the new limit is not extended, home prices will “crater, and it’ll be our fault.”

But the opposition among House conservatives is fierce. Rep. Scott Garrett (R., N.J.), a leader on the conservative Republican Study Committee, has described the measure as a subsidy for the very wealthy. A number of high-ranking members have also spoken out against the measure. In a letter to GOP members of the conference committee, Republican Conference chairman Jeb Hensarling (R., Texas) and House Financial Services chairman Spencer Bachus (R., Ala.) wrote to express their “strong opposition” to extending the mortgage limit, arguing that doing so would “undermine efforts to wind down . . . Fannie Mae and Freddie Mac and to limit the risks of further government bailouts.”


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