The Community Mortgage Lenders of America (CMLA) has released a white paper on the future of the government-sponsored enterprises (GSEs) that calls for Fannie Mae and Freddie Mac to remain intact as reduced entities.
In its white paper, the CMLA urges a smaller Fannie Mae and Freddie Mac that normalize credit risk pricing, pay an insurance premium to remove the hidden subsidy, and continue to reduce their retained portfolios as market pricing allows, with the goal of providing a window for other entities to serve the market over the next several years.Â
The CMLA endorses a future whereby the GSEs shrink to serve 30% to 35% of the overall secondary mortgage market and are barred from securitizing or investing in anything but plain ‘vanilla’ mortgages.
Furthermore, the CMLA urges that the GSEs fully repay U.S. taxpayers for the financial support provided to them since they began their federal conservatorship in 2008.
‘Our plan is forward-looking and will result in distinct changes in the secondary market,’ says Mark McDougald, chairman of the CMLA. ‘However, we call on Washington to move expeditiously and to avoid drastic, politically driven changes that will harm small lenders and the small communities in which they serve.
‘The housing bubble has decimated families, communities and economic growth,’ McDougald adds. ‘But if we don't move soon to create certainty and clarity, Washington by its own actions will prolong this housing recession and cause more damage.’