The U.S. Senate Banking Committee will start its debate over how to overhaul the mortgage finance system by focusing on five issues, including improved mortgage servicing standards, its new chairman told colleagues.
Senator Tim Johnson, the South Dakota Democrat who heads the panel, outlined the committee’s agenda in a Feb. 2 memo to members that was obtained by Bloomberg News. Restructuring the housing finance system, including mortgage firms Fannie Mae and Freddie Mac, and overseeing the implementation of the Dodd-Frank financial regulatory overhaul will be the panel’s top priorities, according to the memo.
Johnson included “improved mortgage servicing procedures” in the five issues that will serve as the “starting point” of the debate on reforming mortgage finance in the wake of the worst housing collapse since the Great Depression, according to the memo. Other issues include the preservation of the 30-year fixed-rate mortgage; giving all borrowers equal access to mortgages and all lenders equal access to the secondary market; and keeping the financing system stable and liquid.
“The chairman has been reaching out to all members of the committee and called a meeting with the Senate Democratic members of the committee late last week to gather their input,” Julianne Fisher, Johnson’s spokeswoman, said today in an e-mail. “The Senator’s working draft agenda is still being finalized and he will discuss it in further detail at the first hearing next week.”
Mortgage servicers have been accused of failing to act swiftly on loan modifications and foreclosures and have been blamed for slowing the housing recovery. Banking and housing regulators are investigating mortgage servicers’ role in the robo-signing scandal, in which lawyers and their employees endorsed thousands of foreclosure affidavits without checking their accuracy.
The memo also outlines Johnson’s intention to conduct close oversight of the implementation of Dodd-Frank, which President Barack Obama signed into law in July. Derivatives rules, the Federal Reserve’s proposals to cap debit-card “swipe” fees, the Volcker rule to bar proprietary trading by banks, and the recommendations of the new council of regulators designed to oversee systemic risk will be watched closely by the panel, according to the memo.
Senator Kay Hagan, a North Carolina Democrat and the newest member of the committee, said the committee has to be focused on careful oversight of the new law.
‘Careful and Deliberate’
“I want to be sure that the implementation of the Dodd-Frank regulatory reform bill is going to move forward in a careful and deliberate fashion,” Hagan said in a phone interview. “I think it’s going to be important to ensure that that’s done in such a way that it does not disrupt economic stability or impede job growth.”
Hagan said she represents “the second largest banking hub in the U.S.” Her state is home to the headquarters of Bank of America Corp., the largest U.S. bank by assets. Wells Fargo & Co., with its 2008 crisis purchase of Charlotte, North Carolina-based Wachovia Corp., also has significant interests and employees in North Carolina.