A new paper issued by a robust group of government and economic leaders in the real estate economy have outlined a proposal to merge Fannie Mae and Freddie Mac into a new government-owned corporation. Currently both organizations are government-regulated, but privately owned. According to the paper the goal of the proposal is to overhaul the mortgage lending process to accomplish the following: “This would facilitate a deep, broad and competitive primary and secondary mortgage market; limit the taxpayer’s risk to where it is absolutely necessary; ensure broad access to the system for borrowers in all communities; and ensure a level playing field for lenders of all sizes.” The new government-owned corporation to be name the National Mortgage Reinsurance Corporation would continue to provide the same services of providing federal guarantee on mortgage-based securities as well as issuing affordable loans to consumers. According to the paper: “The NMRC would purchase conforming single-family and multifamily mortgage loans from originating lenders or aggregators, and issue securities backed by these loans through a single issuing platform that the NMRC.” The paper suggests that the new entity would be able to encourage more investment by charging lower fees than the current system when investors are more willing to take on risk, but higher fees when investors are more cautious, the Journal reported. The NMRC would differ greatly from its predecessor organizations. “The NMRC would differ from Fannie and Freddie, however, in several important respects. It would be required to transfer all non- catastrophic credit risk on the securities that it issues to a broad range of private entities. Its mortgage-backed securities would be backed by the full faith and credit of the U.S. government, for which it would charge an explicit guarantee fee, or g-fee, sufficient to cover any risk that the government takes. And while the NMRC would maintain a modest portfolio with which to manage distressed loans and aggregate single- and multifamily loans for securitization, it cannot use that portfolio for investment purpose.” As some of you may know, I am on the Board of Directors of the National Small Business Association. From my recent experiences working with this group and lobbying on the Hill, I would highly doubt that a change as fundamental as this will be accomplished with our current administration and Congress. I would love to get your opinion about the inherent risks and rewards of this proposed solution.
It is a great honor to be able to serve on the Board of Trustees of the National Small Business Association. Below is a piece by NSBA President and CEO Todd McCracken discussing important issues facing all small business across industries, including real estate. I look forward to sharing more valuable information like this from the NSBA with our industry! To become a member of the NSBA visit nsba.biz Inside the Beltway – March The Monthly Update on Small-Business Policy By NSBA President and CEO Todd McCracken Small Business Policymakers On Wednesday, March 5, the Senate Small Business Committee voted to approve the nomination of Maria Contreras-Sweet as Administrator for the U.S. Small Business Administration (SBA) Nominated Jan. 15, 2014 by President Barack Obama, Contreras-Sweet’s nomination now heads to the full Senate for a vote, wlthough no clear timeline has been established for that vote. NSBA registered support for Contreras-Sweet and is urging the Senate to move expeditiously in confirming her. In addition to changes at SBA, the U.S. Senate Small Business Committee has also welcomed new leadership in recent weeks. Sen. Maria Cantwell (D-Wash.) has taken over as Chair for the committee, replacing Sen. Mary Landrieu (D-La.), who became Chair of the U.S. Senate Energy and Natural Resources Committee. Sen. Cantwell’s first act as chair was overseeing the committee markup to approve the nomination of Contreras-Sweet as the next SBA Administrator. Sen. Cantwell has been a champion for many small business issues, specifically calling for improved small-business access to capital. Tax Reform Tax reform has long been a top priority for NSBA, where data has shown that recently, complexity is outpacing financial cost as the number one burden posed to small businesses by the U.S. tax code. On Feb. 26, House Ways and Means Committee Chairman Dave Camp (R-Mich.) released broad tax reform language—the culmination of several years of intense work by various Members of Congress, staff and stakeholders—which would lower corporate and individual tax rates, reform U.S. international tax rules and aims to simplify the tax code. Among the key provisions in Chairman Camp’s proposal that would impact small-business owners: The current 35 percent top corporate rate would be reduced over five years to 25 percent; The current seven individual income tax brackets—ranging from 10 percent to 39.6 percent—would be replaced by just two tax brackets of 10 percent and 25 percent; A 10 percent surtax would be […]
As some of you may know I was recently appointed as a Trustee to the National Small Business Administration. One of the reasons I am thrilled to serve with this group is their stated non-partisan approach to evaluating and influencing policy. If any of you have suggestions about ways you believe the Federal Government can better serve the needs of your small business please pass them my way. I would love to represent your ideas to the NSBA. As part of my appointment, I now have the privilege of receiving regular communications helping me and thousands of other small business owners to stay in touch with policies and programs and the impact they have on small businesses. I thought I would share the following article that was published today on the NSBA’s website helping us to understand the implications of the issues discussed during President Obama’s State of the Union Address this week. If you would like to benefit from the NSBA yourself, here’s the link: Enjoy the NSBA article in its entirety here…… On Tuesday, Jan. 28, President Barack Obama delivered his State of the Union Address which held good and bad implications for America’s small businesses. NSBA was pleased to hear the president’s support for enhancing exporting opportunities for small firms and sensible immigration reform. However, he missed the mark in calling for economic security through a drastic increase to the minimum wage and failing to offer a serious path forward on the very serious fiscal issues facing the country. Overall, the address didn’t offer a great deal of substantive policy directives and for those items he did highlight, few specifics were offered. Additionally, small business was a very small component of the speech, garnering just a few mentions with regards to the administration’s loan programs and export promotion efforts. One surprise, given predictions ahead of the speech, was far less emphasis on unilateral actions the President plans to take in the coming year. Responding to the widening gap in Congress, it was anticipated that the President would focus more heavily than he did on his plans to enact Executive Orders to move on certain issues. One Executive Order he did mention, however, was one to bump federal contractors’ minimum wages up to $10.10. This will likely create a competitive disadvantage for small contracting firms who also operate in the private marketplace. Such a large increase will force […]