MBA Proposes Path for GSE Reform

February 2, 2017

The Mortgage Bankers Association (MBA) released a paper outlining its recommended approach for secondary mortgage market reform, with the objective of ending the conservatorship of Fannie Mae and Freddie Mac (the GSEs) and establishing a new, durable foundation for the secondary mortgage market.

The paper outlines principles that should be incorporated in any future system, the key components and guardrails of the end-state and emphasizes the need to ensure a smooth transition to a reformed secondary mortgage market.

The paper is 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. It concluded by reaffirming an end-state that would encourage multiple guarantors. 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. The 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. To address underserved markets nationwide, the entities would be responsible for executing an affordable housing strategy to ensure broad access to credit.

The MBA plans to elaborate on all of these concepts in a full paper expected to be released in April.

ALTA supports the following principles as part of the housing finance reform and restructuring process:

  • ensure a national mortgage market that provides equal access to credit for all Americans
  • help consumers with mortgage credit through standardization
  • lower costs of providing credit to consumers
  • encourage liquidity through the secondary market
  • preserve the uniform standards currently provided by the GSEs, including title insurance, in a newly developed housing finance system

If you have questions about GSE reform, contact Justin Ailes, ALTA’s vice president of government affairs.

Contact ALTA at 202-296-3671 or