The proposal, GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market, was released by the Mortgage Bankers Association (MBA), offering a detailed outline of a secondary mortgage market that MBA believes could emerge reformed and revitalized if changes are instituted. In the spotlight are two critical areas: the appropriate transition to the reformed system, and the role of the secondary mortgage market in advancing an affordable housing strategy.
Anxious to create a sustainable solution regarding the government’s role in the housing industry that doesn’t create a reprise of the errors that led to the financial crisis, MBA Chairman Rodrigo Lopez CMB, Executive Chairman of NorthMarq Capital, stated that the 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.”
MBA’s proposed approach to GSE Reform includes specific changes that will:
- Introduce considerably higher levels of risk-bearing private capital into the mortgage system, aiming to drastically reduce the system’s reliance on government support.
- Heighten the stability of the mortgage system with numerous Guarantors that will function as privately-owned utilities.
- Better the level of service and performance in the secondary mortgage market by having multiple Guarantors competing on operations and systems development, product parameters and innovation, customer service, and pricing and execution.
- Safeguard consumers and taxpayers with a clear set of market conduct guidelines, sensible requirements, and a new federally-backed Mortgage Insurance Fund (standing behind the mortgage backed securities, not the Guarantors themselves) funded by appropriately priced insurance premiums.