To win support from deficit-minded lawmakers, the sponsors could boast that the bill pays for itself through reduced default rates on government-backed loans. But the measure has fallen victim to partisan gridlock, with Republicans anxious to bring in their own plans on housing policies and Democrats wary of tough votes on the future of Fannie and Freddie.
In September, Boxer and Menendez slightly modified their bill to address some industry and GOP concerns. The move won the endorsement of the powerful Mortgage Bankers Association, but Republicans didn’t bite, leaving no clear path toward a vote in the lame-duck session.
Still, efforts to encourage more mortgage refinancing will not go away, particularly when interest rates remain so low and lawmakers are eager to assist the economy.
Senate Democrats could always reprise their efforts next year, or regulators could take administrative actions without waiting for Congress. DeMarco, for instance, could enact the changes sought by Menendez and Boxer with his authority over Fannie and Freddie.
If DeMarco doesn’t embrace these and other policies sought by the Obama administration, the president may seek to replace him. Republicans have already blocked one nominee to lead the housing finance agency, but Obama would seem likely to try anew in his second term. And if Obama is stymied by GOP senators again, there is always the route of a controversial recess appointment.