Paper Proposes Plan for GSE Reform

Fannie-Freddie-logosThe Mortgage Bankers Association has released a proposal for GSE reform, which provides a detailed roadmap toward reform, as well as insight into the transition period and the role the secondary market would play.

Laid out in a white paper titled “GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market,” the MBA’s plan specifically calls for a number of items: injecting high levels of risk-bearing private capital into the mortgage system; reducing the system’s reliance on government support; enhancing the stability of the mortgage system through multiple guarantors; setting clear rules of conduct to protect taxpayers; introducing a new federally-backed mortgage insurance fund; enabling access for all sized lenders; and improving performance in the secondary market.

The plan also aims to “meet the needs of the full continuum of households, from families requiring the most directly subsidized, affordable rental homes to those served by the completely private jumbo single-family lending market.”

According to Rodrigo Lopez, Executive Chairman of NorthMarq Capital and Chairman of MBA, the MBA hopes to work with legislators on reforming the system.

“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,” Lopez said. “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.”

No matter what happens with GSE reform, Michael C. May, Executive Managing Director at Berkeley Point Capital, said supporting the multifamily market is of the utmost importance.

“The GSEs provide crucial support to the multifamily market,” May said. “MBA’s detailed end state solution preserves this role and expands its ability to support affordable housing and workforce housing for owners and for renters.”

The MBA released another paper in January, titled “GSE Reform: Principles and Guardrails.” Today’s release is a follow-up to that.


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