MBA Turns Attention Towards Secondary Mortgage Market
A task force at the Mortgage Bankers Association this week issued a white paper that represents the Washington-based industry lobbying group's first swing at pushing forward a vision for the future of the nation's secondary mortgage markets. Obviously, much of the private-party mortgage market has been decimated by the past two years, and plenty of questions remain over just what the agency and government-led mortgage market might look like -- in particular, as participants have noted to HousingWire repeatedly, a growing concern is eating away at industry participants over just what the future sources of mortgage liquidity will be, what they will look like, and where they will come from. The white paper, released Tuesday morning by the MBA's Council on Ensuring Mortgage Liquidity, isn't an attempt to provide policy recommendations; if anything, the paper reads like a 40-page overview of how the secondary markets operate, and makes a few broad characterizations about such things as the need for better transparency and limiting fraud. See the white paper. "The paper has been designed to provide a common foundation and language as the policy discussions take shape," John Courson, the newly-installed president and CEO at the MBA, wrote in an opening letter. "In coming weeks and months, the Council will build on the work of the summit and this paper to identify key principles that policymakers and others should consider when evaluating proposals that will affect the market’s future." The MBA isn't alone in its effort to attempt to chart a course for the secondary markets -- the American Securitization Forum launched its own program, called Project RESTART, in July of last year. It's unclear if the MBA and ASF are coordinating their own efforts in this area, and its also unclear if the recommendations yet forthcoming from the MBA will map onto what's already been done by other groups, including the ASF, in recent months. But the fact that the task force's name centers on liquidity is telling -- much of the mortgage bankers' perspective on the issue of secondary markets remains focused on origination issues, after all. But a large portion of the problems in the secondary market center also on servicing practices, loss mitigation and default management, as well; a fact that has clearly been borne out in recent months over growing frustration with loss mitigation efforts. The MBA white paper released Tuesday did not address a market typology in this complex and oft-misunderstood space, although it did more directly address the role of the GSEs (much of the ASF efforts thus far have centered on revitalization of private party markets, if only because agency markets continue to lurch forward). Beyond Project RESTART and the MBA's efforts, the ASF, along with the Securities Industry and Financial Markets Association, the European Securitisation Forum and the Australian Securitisation Forum, also released a set of recommendations in Dec. that the groups said was designed to prioritize the market responses needed to restore the securitization market; the groups suggested that banks may fail to meet $2 trillion of demand for credit origination over the next three years, without well-functioning securitization markets. Click here to read the joint ASF/SIFMA/ESF/AuSF report. Of course, as HousingWire Magazine readers know well from our most recent issue, officials with the U.S. Treasury and Federal Reserve have been pushing covered bonds as a liquidity option for the mortgage market going forward. While key market participants committed to such a program have yet to issue a deal involving the funding mechanism, sources said they expect to see a few deals issued for covered bonds before the end of the first quarter of this year as issuers "test the waters." Write to Paul Jackson at firstname.lastname@example.org.