MBA's proposal for GSE reform represents “the most complete and credible GSE reform proposal offered in the post-crisis era,” said Stevens. He added, “Our proposal is unique because it was created by practitioners in the industry,” and because “it is the only one that offers a transition framework: how to get the system from conservatorship, to the new end state.” It's also the only proposal to address “the thorny issue” of funding affordable housing via the secondary market, he said.
He called on Congress to empower the Federal Housing Finance Agency, or a successor regulator, to re-charter the GSEs “through legislation that also opens the door for new entrants to obtain similar charters,” thus ensuring “a level playing field allowing for lenders of all sizes to compete.” Further, Congress, the only body that could create the Mortgage Insurance Fund proposed by MBA, also needs to establish “a new, explicit government guarantee” to stand behind the eligible MBS insured through the fund.

As for affordable housing, Stevens said, “We believe that any new system must expand access for affordable mortgage credit; preserve and develop affordable rental housing; and improve liquidity for underserved segments of the mortgage market. America's housing needs must be served along the full continuum. from the most subsidized government assistance programs, to the fully-private, jumbo mortgage market. Our proposal looks to ensure the new guarantors have incentives that will support, not distort, the market for affordable mortgage credit.”

NEW YORK CITY—Mortgage Bankers Association president David H. Stevens on Monday rejected “recap and release” of Fannie Mae and Freddie Mac as a strategy for strengthening the secondary mortgage market. In prepared remarks at the opening general session of MBA's National Secondary Market Conference and Expo in New York City, Stevens said MBA's latest proposal for GSE reform “preserves what works in the current system, while enhancing the stability of the market, and protecting taxpayers and consumers.”

The “recap and release” of Fannie and Freddie would entail the government recapitalizing both entities and then quickly selling its stakes, Treasury Secretary Steven Mnuchin has testified that he doesn't endorse that solution, although he has also made it clear that housing finance reform is a priority of the current administration.

“Simply put, recap and release is more like rewind and repeat,” Stevens said Monday. “It would return the GSEs to their previous state without safeguards to ensure the positive progress during conservatorship remains and without any guarantee the agencies will operate in a manner that protects the taxpayer going forward.

“This is dangerous ground that destabilizes the system and does nothing to protect our economy, our homes or taxpayers from another bailout,” he continued. “Rather, recap and release is a 'solution' designed to protect the personal pocketbooks of a select few.”

MBA's proposal for GSE reform represents “the most complete and credible GSE reform proposal offered in the post-crisis era,” said Stevens. He added, “Our proposal is unique because it was created by practitioners in the industry,” and because “it is the only one that offers a transition framework: how to get the system from conservatorship, to the new end state.” It's also the only proposal to address “the thorny issue” of funding affordable housing via the secondary market, he said.
He called on Congress to empower the Federal Housing Finance Agency, or a successor regulator, to re-charter the GSEs “through legislation that also opens the door for new entrants to obtain similar charters,” thus ensuring “a level playing field allowing for lenders of all sizes to compete.” Further, Congress, the only body that could create the Mortgage Insurance Fund proposed by MBA, also needs to establish “a new, explicit government guarantee” to stand behind the eligible MBS insured through the fund.

As for affordable housing, Stevens said, “We believe that any new system must expand access for affordable mortgage credit; preserve and develop affordable rental housing; and improve liquidity for underserved segments of the mortgage market. America's housing needs must be served along the full continuum. from the most subsidized government assistance programs, to the fully-private, jumbo mortgage market. Our proposal looks to ensure the new guarantors have incentives that will support, not distort, the market for affordable mortgage credit.”