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January 19, 2017
CMC’s 2017 Annual Summit Wrap-Up
March 22, 2017

MBA Releases GSE Reform Principles and Guardrails

News From our Partner—Mortgage Bankers Association:

Dear MBA Member:

Today, MBA is releasing a paper outlining its recommended approach to GSE reform, with the objective of ending the conservatorship of Fannie Mae and Freddie Mac and establishing a new, durable foundation for the secondary mortgage market.  This paper is the result of several months of work by MBA’s Task Force for a Future Secondary Mortgage Market. The members of the Task Force are made up of individuals from MBA member companies representing a broad cross-section of the residential and multifamily real estate finance industry.

Our paper outlines a preferred end-state, the principles that should be incorporated in any future system, the key components and guardrails of the end-state, and the need to ensure a smooth transition to the reformed secondary mortgage market.

The plan encourages multiple guarantors, including re-chartered GSEs and newly chartered entities, organized as privately owned utilities with a regulated rate of return, and overseen by a strong regulator. The guarantors would ensure sustainable credit availability to the conventional mortgage market to lenders of all sizes and business models.

MBA believes that the GSEs must be re-chartered to protect the taxpayer and execute on certain essential reforms that would ensure equal access to the secondary market for firms of all sizes and business models. To change the GSE charter, Congress must pass legislation and it must be signed into law by the President. 

Guarantors would also be responsible for executing on an affordable-housing strategy to ensure broad access to credit, preserve and develop affordable housing options, and address underserved markets nationwide.

These newly chartered guarantors would acquire eligible single-family and multifamily mortgages and issue mortgage-backed securities wrapped with an explicit guarantee provided by the federal government. The explicit guarantee only applies to the MBS. The federal guarantee would be funded by insurance premiums paid by the chartered guarantors to a dedicated, actuarially sound Mortgage Insurance Fund.

Our plan also builds on the significant administrative progress already made by the GSEs under FHFA’s direction, including the Common Securitization Platform, Single Security, credit risk transfer programs, and expanded Seller/Servicer base.

We will elaborate on all of these concepts in our full paper, anticipated in late April, and provide more detailed end-state reform recommendations including principles for an orderly transition and an affordable housing strategy.

This page contains a link to the paper and other documents related to it.

MBA looks forward to working with Congress, the Trump Administration, and other stakeholders to make sure that any reform to the secondary mortgage market strengthens and protects lenders of all sizes, as well as consumers.

If you have any questions, please feel free to reach out to me. Thank you as always for supporting MBA.

Best regards,
Rodrigo López, CMB
2017 Chairman
Mortgage Bankers Association