MBA Pushes for Standardized Whole Loan Sales Form
The Mortgage Bankers Association (MBA) released a model sale and servicing agreement form for lenders to use when buying and selling whole loans with the intent of selling to the securitization market. MBA said the form provides standard formatting and text and using it will reduce the time, effort and cost of legal and due diligence reviews, and increase liquidity and efficiency in the non-conforming residential mortgage market. “At the current time, there is virtually no private label [mortgage backed securitization] market to speak of," said MBA president and CEO John Courson. "When the market begins to return, we expect it will start with whole loan transactions. This model agreement will provide consistency and transparency to help investors get a better understanding of the whole loans they are purchasing.” A work group in the MBA’s secondary and capital markets committee drafted the form after a review of existing whole loan servicing agreements. A draft was released in July for public review and comment, and the final document incorporates that feedback. “The model agreement was drafted by members, for members and with significant input from a wide variety of stakeholders,” Courson said. “Plus, we've developed protocols so that the agreement reflects standard practices and legal requirements both now and in the future.” Write to Austin Kilgore.