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Since the creation of Fannie Mae in the 1930s, the federal government has played a key role in providing stability to the secondary mortgage market. The current housing crisis has tested the government’s role and led to calls for a fundamental rethinking of how it should play its part.
To provide information and insights to this rethinking, in October 2008 the Mortgage Bankers Association (MBA) established the Council on Ensuring Mortgage Liquidity. The Council’s mission has been to look beyond the current crisis, to what a functioning secondary mortgage market should like for the long term.
Key Considerations for the Future of the Secondary Mortgage Market and the Government Sponsored Enterprises (GSEs)
On November 19, 2008, the Council hosted a summit on the future of the secondary mortgage market and the GSEs that brought together leading thinkers from industry, academia and regulators to discuss what fundamental elements would be required for a functioning secondary market. The discussion led to the Council-issued report "Key Considerations for the Future of the Secondary Mortgage Market and the Government Sponsored Enterprises (GSEs)," which was released in January 2009.
Read this report.
Principles for Ensuring Mortgage Liquidity
The Council’s second task was to develop a set of guiding principles embodying the key considerations mentioned in the primer. The report "Principles for Ensuring Mortgage Liquidity" was released by the Council on March 19, 2009. The principles serve as a tool for evaluating proposals that arise for restructuring the secondary market.
Read this report.
Future Government Role in the Core Secondary Mortgage Market
As the policy spotlight has turned to the futures of Fannie Mae and Freddie Mac, the Council has taken on the questions of what an appropriate future government role in the core secondary mortgage market might look like. After thoughtful discussions and deliberations, we now present the Council’s Recommendations for the "Future Government Role in the Core Secondary Mortgage Market."
This report presents the Council’s suggested framework for government involvement in the single-family and multifamily secondary mortgage markets, with a particular focus on the roles currently played by Fannie Mae and Freddie Mac. While clearly not the only potential framework for the future, the Council’s recommendations represent a clear, concise and workable approach to ensuring liquidity to the mortgage market. The proposed framework carefully balances the government’s ability to ensure liquidity with the need to protect taxpayers from credit and interest rate risks associated with mortgage finance.
Read this report.
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