Mba's Comment on Administration's White Paper on Government Role in the Secondary Mortgage Market
Michael D. Berman, CMB, Chairman of the Mortgage Bankers Association (MBA), today issued the following statement in response to the Obama Administration's release of a white paper outlining potential approaches to reforming the government's role in the secondary mortgage market.
'Today is another important milestone on the road to stabilizing the mortgage market. By putting forth its white paper, the Obama administration joins Congress, the industry and other stakeholders in advancing the dialog on the proper role of the government in the real estate finance markets.
'We are gratified to see that one of the concepts they articulate closely tracks MBA's proposal, released eighteen months ago, that visualizes a workable, commonsense system driven by private capital. Our proposal envisions an explicit, but limited, government guarantee of lower-risk mortgage-backed securities. The guarantee would be paid for by fees used to build a fund to protect taxpayers. We continue to believe that this is the most prudent approach, one that places the primary risk on private investors and ensures sufficient liquidity during times of economic stress in order to provide affordable mortgage finance in all types of mortgage markets. Our proposal directly addresses the problems that caused the failure of the Fannie Mae/Freddie Mac system.
'We look forward to working with legislators, the administration and other stakeholders to evaluate the different proposals on restructuring the market without dramatically increasing the cost of credit, and thoughtfully working through the important transition issues facing the current government sponsored entities (GSEs). The sooner we can resolve these important issues, the sooner we can restore stability and confidence to the mortgage and housing markets.'
Company: Mortgage Bankers Association of America, Washington-District of Columbia