In a recent story in Mortgage Orb, I was asked to comment on the MBA white paper called “GSE Reform: Creating a Sustainable, More Vibrant Secondary Mortgage Market.” The white paper discusses the new MBA proposal to have the GSEs “congressionally re-chartered” (re-privatized) and have the mortgage-backed securities that they issue be “explicitly guaranteed!” I stated that in my opinion, the MBA is on target with its approach.
Further, I said that the plan should provide a higher level of risk-bearing private capital into the market, which will significantly lower the industry’s dependence on government support while enhancing market stability.
It will ensure we have multiple guarantors that will be regulated much like private utilities while balancing the needs of consumers, lenders, and shareholders, including protection for both the taxpayer and the borrower.
Additionally, I think the proposal’s chances of success are quite good, considering how much time and effort has been invested by a wide cross-section of industry participants.
I am very hopeful, but, GSE reform is likely going to take some time to implement, as it will likely need to be rolled out in phases. I certainly think there’s potential for reform under the Trump administration, but with most other major issues, GSE reform is a very complex issue and I would not expect any changes to happen overnight.
I was asked whether I would change anything in the plan. For my answer and the rest of the story, click here.
To Download the MBA Whitepaper, click here.