MBA Mortgage Action Alliance Call to Action Urges Flexibility on GSE Purchase Caps
The Mortgage Bankers Association’s grassroots advocacy arm, the Mortgage Action Alliance, issued a Call to Action last week, asking its members contact their members of Congress to allow flexibility in implementation of new purchase caps placed on Fannie Mae and Freddie Mac.
Over the past several weeks, MBA has continued its efforts to address market disruptions caused by these new limits placed on Fannie Mae and Freddie Mac through Senior Preferred Stock Purchase Agreements. These limits – instituted by the Treasury Department and the Federal Housing Finance Agency – include caps on GSE purchases of second homes, investor properties and “risk-layered” loans, as well as caps on individual lenders’ use of the GSE cash windows.
MBA has focused on the near-term problems caused by the immediate implementation of the 7% limit on GSE acquisitions of loans secured by second homes and investor properties. Following a letter sent to Treasury and FHFA highlighting key concerns, MBA staff held meetings with several senior officials to further discuss these concerns as well as propose possible solutions to prevent market disruptions, such as the use of a longer runway for the GSEs to become compliant with the caps.
MBA Senior Vice President of Legislative and Political Affairs Bill Killmer said a more flexible approach and timeline would allow the GSEs to come into compliance by making necessary adjustments to their automated underwriting systems on a prospective basis. “This solution would alleviate concerns about existing loan pipelines and make lender-specific caps unnecessary,” he said. “Gradual changes also would provide time for private capital alternatives to develop the operational capacity to better serve these market segments.”
Killmer said immediate implementation of these product caps – particularly for second homes and investor properties – “significantly impacts existing lender pipelines and is creating major disruptions in the market.”
MBA will continue to advocate with senior leadership at FHFA, Treasury and the GSEs to find a solution to the short-term implementation issues and will continue to urge re-evaluation of the various product limits, as well as the cash window limits that take effect in January 2022.
MAA asked its members to contact their senators and representative and urge them in turn to contact Treasury Secretary Janet Yellen and FHFA Director Mark Calabria to allow flexibility in the implementation of the GSE purchase caps.
For more information about the Call to Action and MAA, click here.