Congressional Budget Office Cost Estimate: S. 1217: Housing Finance Reform and Taxpayer Protection Act of 2014   [open pdf - 173KB]

From the document: "S. 1217 would establish the Federal Mortgage Insurance Corporation (FMIC) to provide a partial federal guarantee for mortgage-backed securities (MBSs). Similar to the financial role played by two government-sponsored enterprises (GSEs)--Fannie Mae and Freddie Mac--FMIC would offer guarantees on MBSs composed of mortgages originated by lenders in the primary market. Under the bill, the GSEs would stop offering guarantees on MBSs. FMIC would charge fees on the underlying mortgages to guarantee the payment of principal and interest to investors in eligible MBSs and would require private capital to absorb some losses before federal payments would occur. Because of those features, CBO expects that the government would take on less risk under FMIC guarantees than it would from continued operation of the GSEs under current law and thereby incur smaller costs. CBO estimates that enacting S. 1217 would reduce direct spending by $60 billion over the 2015-2024 period--largely because new fees that FMIC would charge the issuers of MBSs would exceed the costs of the guarantees as calculated under the Federal Credit Reform Act (FCRA). In addition, under the bill, revenues would decline by $1.5 billion over the 2020-2024 period because the Federal Housing Finance Agency (FHFA)--the GSEs' regulator--would no longer assess fees on the GSEs (which are recorded in the budget as revenues) to cover the agency's administrative costs. Combining those effects on direct spending and revenues, CBO estimates that enacting the bill would decrease federal deficits by $58 billion over the 2015-2024 period. Because enacting S. 1217 would affect direct spending and revenues, pay-as-you-go procedures apply."

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