The Mortgage Bankers Association is pushing for reform of Fannie Mae and Freddie Mac that would temporarily retain existing secondary market functions that accommodate smaller lenders but ultimately improve upon them.
The paper, released Monday, calls for price certainty, including guarantee fees that reflect the risk of the underlying loan (and the loan volume or the asset size of the lender).
It also calls for execution of both servicing-retained and servicing-released loans, single loan and/or small pool executions with a low minimum pool size, ease of delivery and quick funding.
Fannie Mae and Freddie Macs cash windows provide some, though not all, of these aspects today, the MBA said in the paper.
The trade group said in any long-term plans for GSE reform the cash window needs to remain in place until an operable single-loan execution process is up and running. As GSE portfolios wind down, sufficient balance sheet space needs to be maintained to aggregate loans from smaller lenders who are not yet ready to securitize.
Second, the FHFA platform initiative needs to include plans for the acceptance of small lot deliveries into multilender pools.
The paper notes that secondary market government agency Ginnie Mae has accommodated single-loan deliveries but notes that in the MBAs opinion this process could be simplified so as to make it more accessible to smaller lenders.