These entities would have a public purpose of providing sustainable credit availability to the conventional single family and multifamily mortgage market and providing equitable access to lenders of all sizes and business models, says MBA. In order to address underserved markets nationwide, the entities would be responsible for executing an affordable housing strategy to ensure broad access to credit.

The paper released Tuesday “is intended to provide thoughtful recommendations on how to reform the GSEs while ensuring a healthy, robust secondary mortgage market emerges for both single-family and multifamily mortgages,” says Rodrigo Lopez, executive chairman of NorthMarq Capital and chairman of MBA. “The US mortgage market requires global capital in order to maintain adequate liquidity through all economic cycles. International and institutional investors will only fill that role if there is an explicit government guarantee on the securities, something that can only be obtained by congressional action.”

In an op-ed appearing in National Mortgage News on Tuesday, Lopez wrote, “MBA's task force considered many models in developing its recommendation and built on recommendations previously suggested by past efforts.” He added that “several key features stood out as critical to ensuring the long-term health of the secondary mortgage market.” They included: leveraging the benefits of competition and strong regulation; ensuring equal market access for lenders of all sizes and business models; preserving a strong public mission; and maintaining a deep, liquid market for long-term, single- and multifamily financing options. “These are the bedrock principles on which a durable housing finance system should be built for future generations.”

Vornado Realty Trust

WASHINGTON, DC—The Mortgage Bankers Association on Tuesday called on Congress to re-charter Fannie Mae and Freddie Mac as part of the association's approach to secondary mortgage market reform. MBA issued its recommendations in a paper titled “GSE Reform Principles and Guardrails” that's intended to serve as an introduction to its position; more detail on the association's vision for an end-state model for Fannie and Freddie, affordable housing strategy and recommended transition steps is expected to be provided in April.

“Comprehensive reform of Fannie Mae and Freddie Mac (the GSEs) remains the final piece of unfinished business from the financial crisis,” according to .the MBA paper. “Administrative reforms undertaken by the Federal Housing Finance Agency (FHFA) have made tremendous progress in stabilizing the companies while paving the way for future reform. Yet, the GSEs remain in conservatorship with no clear path forward. Over the years, various proposals introduced in both the House and Senate have yielded productive discussions but have stumbled for a variety of reasons, including complexity, fears of exacerbating the impact of credit or economic cycles, or the perceived lack of a sufficient affordable housing strategy.”

MBA's paper was derived from the work of MBA's Task Force for a Future Secondary Mortgage Market. The task force considered the benefits and drawbacks of many potential models in developing its recommendation, and concluded by reaffirming an end-state that would encourage multiple guarantors, consistent with the association's previous recommendation.

The guarantors would be organized as privately owned utilities with a regulated rate of return. Guarantors could purchase from a newly created insurance fund an explicit federal guarantee on a defined class of eligible securities. The guarantee would only be for the securities and not the entities issuing them.

These entities would have a public purpose of providing sustainable credit availability to the conventional single family and multifamily mortgage market and providing equitable access to lenders of all sizes and business models, says MBA. In order to address underserved markets nationwide, the entities would be responsible for executing an affordable housing strategy to ensure broad access to credit.

The paper released Tuesday “is intended to provide thoughtful recommendations on how to reform the GSEs while ensuring a healthy, robust secondary mortgage market emerges for both single-family and multifamily mortgages,” says Rodrigo Lopez, executive chairman of NorthMarq Capital and chairman of MBA. “The US mortgage market requires global capital in order to maintain adequate liquidity through all economic cycles. International and institutional investors will only fill that role if there is an explicit government guarantee on the securities, something that can only be obtained by congressional action.”

In an op-ed appearing in National Mortgage News on Tuesday, Lopez wrote, “MBA's task force considered many models in developing its recommendation and built on recommendations previously suggested by past efforts.” He added that “several key features stood out as critical to ensuring the long-term health of the secondary mortgage market.” They included: leveraging the benefits of competition and strong regulation; ensuring equal market access for lenders of all sizes and business models; preserving a strong public mission; and maintaining a deep, liquid market for long-term, single- and multifamily financing options. “These are the bedrock principles on which a durable housing finance system should be built for future generations.”