MBA lays out plan for a “more vibrant” secondary mortgage market

by Anna Sobrevinas25 Apr 2017
The Mortgage Bankers Association (MBA) has released a detailed plan for GSE reform, calling for more private capital, multiple guarantors and a new federally backed insurance fund.

The 60-page white paper, “GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market,” includes the association’s recommendations to transition to a new secondary-market end state.

"This paper not only lays out a detailed end-state solution that will work for the residential and multifamily markets, but also the transition steps to accomplish this goal," said MBA Chairman Rodrigo Lopez. "We look forward to working with Congress and the administration to find a permanent, sustainable solution to the government's role in housing finance that doesn't repeat the mistakes that led to the crisis."

Some of the approaches MBA recommended were the following:
  • Dramatically increasing the level of risk-bearing private capital in the mortgage system, while slashing the system's reliance on government support.
  • Creating multiple guarantors that will operate as privately owned utilities.
  • Creating a clear set of market conduct rules, prudential requirements, and a new federally backed mortgage insurance fund – that stands behind the mortgage-backed securities, not the guarantors themselves – financed with insurance premiums.
 “Key leaders on Capitol Hill and in the new administration have made it clear that GSE reform should be accomplished through bipartisan legislation," said David H. Stevens, MBA president and CEO. "While progress has been made during conservatorship, only Congress has the power to ensure lasting reform."

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