MBA Leads Joint Trades Letter on Basel III Re-Proposal

The Mortgage Bankers Association, with seven other trade groups, sent a letter to Federal Reserve Vice Chair of Supervision Michelle Bowman, Comptroller Jonathan Gould and Federal Deposit Insurance Corp. Chair Travis Hill, outlining aligned views on several major components of the forthcoming Basel III re-proposal.

MBA was joined by the American Bankers Association, the Consumer Bankers Association, the Housing Policy Council, the Independent Community Bankers of America, the Mid-Sized Bank Coalition of America, the U.S. Chamber of Commerce and U.S. Mortgage Insurers.

The recommendations on improving housing affordability through bank capital modernization include:

• Reducing the punitive capital treatment of MSRs;
• Adopting more granular, LTV-based risk weights;
• Lowering the capital treatment of mortgage warehouse credit facilities,
• Properly recognize private mortgage insurance as credit enhancement; and,
• Ensuring predictable capital treatment for credit risk transfers.

“We believe the agencies have an important opportunity to modernize bank capital standards to strengthen both financial stability and housing affordability,” the letter states. “Properly calibrated rules can support a diverse, competitive mortgage market–one that sustains consumer access to credit, promotes liquidity in mortgage servicing and origination, and maintains appropriate prudential safeguards.”

Click here or scroll below to read the letter