WHAT IS THE PATH ACT:

The PATH Act is a comprehensive restructuring of mortgage markets. The bill has two major goals: 1) dissolve Fannie Mae and Freddie Mac and replace them with a new secondary mortgage market structure that does not include a government guarantee and 2) restructure and limit the FHA Mortgage Insurance Program. There are numerous problematic provisions in the Act that would limit access to mortgage credit, increase the cost of that credit and prevent many credit-worthy and responsible families from purchasing a home. Most significantly, 1) NAR strongly opposes the PATH Act’s elimination of a federal guarantee for the secondary mortgage market which ensures the availability of the 30 year fixed-rate mortgage; and 2) NAR believes that FHA has been making significant changes to address problems and does not need to be restructured in the manner proposed by the Act. The proposed FHA provisions will disenfranchise families by increasing downpayments, lowering loan limits, and limiting the program to low income households or a very narrow definition of first-time homebuyers. Instead, FHA needs the authority to undertake reforms already identified to strengthen its financial footing.

WHY IS THIS IMPORTANT?
Freddie Mac/Fannie Mae: The PATH Act does not include a federal guarantee that ensures the continued availability of a 30-year fixed rate mortgage. A government’s guarantee is needed to provide the capital to fund and ensure a wide range safe, reliable mortgage products for creditworthy consumers. Without the federal government clearly, and explicitly, offering a guarantee of some mortgage instruments, affordable mortgage financing will not be consistently available in all market conditions.