Solving the Post-Close Challenge with Intelligent Automation

Join our upcoming webinar as SoftWorks AI CEO and Avanze CEO explore the advances in tech that allow for greater levels of automation and cost reduction, especially in support of post-close and pre-fund review.

Spruce’s Patrick Burns on innovation in title technology

In the season finale of Housing News season 5, Spruce CEO discusses heightened investor interest in title tech, innovation and fintech adoption.

Top CFPB official “hates” QM rules, jeopardizing safe harbo

A top CFPB official in charge of the rule-making process has heavily criticized the agency's own qualifying mortgage rule, jeopardizing safe harbor.

How borrower education can make housing more attainable

The current housing market is making it difficult for prospective buyers to afford a home. Housing professionals need to find ways to better meet buyer needs.


MBA President Stevens defends need for multiple guarantors in GSE reform

Should reform preserve the current duopoly of Fannie Mae and Freddie Mac?

The Mortgage Bankers Association was one of the first groups to publish their thoughts for the government on how to best tackle reforming Fannie Mae and Freddie Mac.   

The 60-page white paper, found here, was a follow-up to the first-look paper the MBA released back in January, which gave a small preview of what they think GSE reform should look like.

But now as the list of people commenting on how to execute reform continues to grow, David Stevens, Mortgage Bankers Association president and CEO, decided to go back and highlight one of the MBA’s main points and defend the need for multiple guarantors in the new system.

Under the MBA’s plan, the system would be a multiple guarantor model, with at least two entities and preferably more.

The first two guarantors would likely be rechartered successors to Fannie Mae and Freddie Mac.

The regulator would be permitted to charter additional guarantors, encouraging competition (or at least the threat of it). New firms would be able to apply for a guarantor charter that authorizes them to serve either the single-family or multi-family market or both markets.

Given the deep history of Fannie Mae and Freddie Mac, and their involvement in the housing industry, Stevens explained in a blog post, “there are some who question the benefits of a multiple guarantor model, and suggest we preserve the current duopoly. So, allow me to explain our thinking.”

Here’s a spotlight of two of the points Stevens makes.

First, markets and consumers are always best served by competitive forces.  Multiple guarantors would give all lenders – but especially smaller lenders – more options. No lender would be required to work with a specific guarantor or to work with all guarantors.  Instead, lenders would able to work with the guarantor or guarantors of their choice. 

Additionally, the prospect of new guarantors would ensure that the existing ones have an incentive to compete against each other in areas such as: offering technology solutions and systems for interfacing with seller/servicers; structuring and executing risk-sharing transactions; product innovation; pricing and execution; and customer service.

And for those who argue that adding new guarantors would increase risk by creating more “too big to fail” entities, Stevens said this is far from the truth.  

“In fact, one of primary benefits of a multiple guarantor model for the secondary mortgage market would be reducing the taxpayer’s exposure by diversifying risk across multiples entities,” he said.

U.S. Department of the Treasury Secretary Steven Mnuchin reaffirmed that housing finance remains a priority under the Trump administration as recent as this past July during his hearing before the House Financial Services Committee. 

And due to the administration’s continuous promise for reform, there are plenty of groups looking to weigh in on the discussion. Here are links to a handful:

Most Popular Articles

Mortgage forbearance drops to 4.36%, exits pick up steam

The downward trend of borrowers in forbearance picked up speed in the last week of April, falling 11 basis points to 4.36% of servicers’ portfolio volume.

May 10, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please