MBA is a strong supporter of the 12 Federal Home Loan Banks (FHLBanks) of the Federal Home Loan Bank System (FHLBank System). More than 300 members of MBA are members of one or more of the FHLBanks. MBA members receive the majority of the FHLBanks' advances, constitute the vast majority of mortgage program participants and hold the majority of the stock in the FHLBanks. The financial health and the effective function of the Banks are of vital interest to MBA and our members.
Regulatory Oversight Reform - MBA believes that a GSE regulator should have authority over capital standards as part of safety and soundness oversight, along with mission and program activity approval authority. It is appropriate that a GSE regulator should be funded by the institutions it oversees and should be free of the Congressional appropriations process. The unique nature of the FHLBank System as a system of 12 cooperative institutions, and the special mission of the FHLBanks should be preserved under any regulatory oversight reform package. MBA further believes that the public interest directors of the FHLBanks provide an important perspective, but MBA believes that reform legislation should remove from the Federal Housing Finance Board (FHFB) the obligation to appoint the public interest directors. It would be better if the public interest directors were chosen by the FHLBanks and their members.
The Banks' Mortgage Programs and Securitization - The FHLBanks have programs, including Mortgage Partnership Finance ("MPF") and the Mortgage Purchase Program ("MPP"), for the acquisition of mortgages from their member institutions. MBA would like to see further development and growth of MPF and MPP, along with enhancements to those programs, including the development of securitization programs. The mortgage acquisition programs have had a positive impact on the health of the mortgage market and the level of guarantee fees charged by the other GSEs. It is MBA's belief that the FHLBanks have the authority to engage in securitization of the mortgages they acquire under the reasoning used by the FHFB and the courts in determining that the MPF program was legitimately authorized. However, it would be beneficial to clarify the enabling statutory language to give express permission for the FHLBanks, subject to regulatory approval, to develop MBS programs, including the flexibility for the FHLBanks to guarantee the MBS.
Membership Eligibility Standards for the Bank - MBA believes that well-capitalized, independent mortgage companies should be granted access to the Banks' advances, the affordable housing programs and the mortgage acquisition programs. Such access is consistent with the stated mission of the Banks, which is to enhance the availability of residential mortgage credit through a lower cost of funds. MBA appreciates the need for the members of the Banks, which are advance counterparties, to be stable, well-capitalized companies, and we believe standards can be developed to achieve that purpose.
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