Fannie Mae-No Politics (FNMA)

[jacklanvo99]

"Conservatorship with no capital and facing a political regime change poses a real threat to our mortgage system," Stevens said. MBA has called for the creation of a single GSE security and for up-front risk sharing to increase competition and provide market access to lenders of all sizes. It also called for the common securitization platform (CSP) to ensure data standardization, fungibility, and objectiveness.

Director (Melvin) Watt responded, Stevens said, the single security is in sight, the CSP is being built although MBA must push aggressively to get it completed, and progress is being made on risk sharing to bring private capital into the market.

Progress has extended beyond the GSEs. MBA fought for a safe harbor in Ability to Repay/Qualified Mortgage (QA) rule and to align QA and the Qualified Residential Mortgage (QRM) rule, one without a downpayment requirement.

Pivoting toward the future, Stevens said that MBA's work is far from finished. While many calls for key policy actions are being met, many are moving at too slow a pace. With the major rules required under Dodd Frank implemented, MBA now needs to keep leading and pushing to refine them to give borrowers the opportunities they deserve.

QM, he said, has done a lot of good but falls short of being a long-term solution. The GSEs can purchase loans that are solidly underwritten but fail to meet the QM standard of 43 percent debt-to-income (DTI) ratios because of a QM "patch" that provides safe harbor for these loans. Without the parch and the permanent exemption for GNMA loans, credit would be much tighter.

But the patch only exists for as long as the GSE's remain in conservatorship or seven years, whichever comes first. When it expires or if GSE underwriting changes substantially "a whole segment of qualified potential borrowers will be frozen out of the market." The QM rule should not punt all credit decisions to two companies that aren't even regulated by the same agency, he said, and the rule should demand the same credit approval process for a borrower whether the loan is being sold to a GSE or a private investor, as long as all the other terms are the same.

He admitted that the industry did advocate for the patch to gain time to assess QM's impact, but said there are now too many "what ifs" that could impact the real estate finance system. What if a new regime at CFPB has a different view about the rule and the patch, or the next FHFA director comes with different ideas of the role scope, and size of the GSEs in the market, or the conservatorship ends?

http://www.mortgagenewsdaily.com/05162016_mba_regulatory_issues.asp