WASHINGTON—The Independent Community Bankers of America (ICBA) has released a white paper detailing its principles and recommendations it is calling for in reforming Fannie Mae and Freddie Mac to support continued access to the secondary mortgage market for community bank lenders.
“As Congress debates the future of the government-sponsored enterprises (GSEs), which have continued to provide housing-market liquidity for decades, including while under conservatorship for more than eight years, ICBA is calling on policymakers to allow Fannie and Freddie to rebuild their capital buffers and preserve equal access to lenders of all sizes,” the trade group said.
The ICBA plan comes at the same time the Mortgage Banker Association has also floated its own plan for Freddie and Fannie, as CUToday.info reported here.
In its white paper, ICBA lays out its principles for GSE reform, including:
- Allowing Fannie and Freddie, which have paid out nearly $80 billion more to the U.S. Treasury than they received during the financial crisis, to rebuild their capital buffers,
- Providing competitive, equal and direct access to the market on a single-loan basis and the continued ability to retain and service those loans locally,
- Reducing the risks posed to the GSEs by credit-risk transfers, and
- Ensuring an explicit, paid-for government guarantee of GSE mortgage-backed securities and strong oversight from a single regulator.
ICBA said its white paper also outlines a way to move forward with needed administrative and legislative reforms, such as:
- The Federal Housing Finance Agency ending the GSEs’ net-worth sweep, establishing capital-restoration plans, and delaying the launch of its Uniform Mortgage Backed Security until the GSEs are recapitalized and released from conservatorship, and
- Congress creating a catastrophic mortgage insurance fund for GSE securities and changing the GSEs to regulated and shareholder-owned financial utilities.
The full white paper can be found here www.icba.org/principlesforGSEreform.