The Rising Role Of Independent Mortgage Banks

The Mortgage Bankers Association (MBA) released a white paper, The Rising Role of the Independent Mortgage Bank – Benefits and Policy Implications, which emphasizes the vital role Independent Mortgage Banks (IMBs) play in single-family real estate finance.

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“IMBs have always served the needs of a wide variety of consumers, particularly low- and moderate-income families and first-time homebuyers. Their historic and current contribution to the mortgage market reinforces their importance to making the American dream of homeownership a reality,” said Robert D. Broeksmit, CMB, President and CEO of the Mortgage Bankers Association.

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Broeksmit continued, “It is the responsibility of all stakeholders, including regulators, to protect consumers by supporting rules and regulations that support IMBs. MBA believes the recommendations put forth in this white paper will enhance market stability and strengthen the housing finance system to better serve consumers.”

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In order to ensure a stable and liquid mortgage market for consumers that features robust competition among a wide variety of types of mortgage lenders, the white paper details a series of policy recommendations. They include:Ensuring that QM standards, as well as GSE and FHA/VA lending standards, remain focused on creditworthy borrowers and safe products. 

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>>Enhancing IMB access to longer-term, stable sources of liquidity to supplement short-term warehouse funding.

>>Providing the government housing finance programs (FHA, VA, USDA, and Ginnie Mae) with the funding and resources needed to implement improved counterparty risk standards that are transparent and risk focused, as well as to identify and respond to emerging risks.

>>Ensuring the mortgage servicing compensation regimes of the GSEs and Ginnie Mae preserve and support a deep and liquid market for mortgage servicing rights (MSRs) for servicers of all sizes and business models.

>>Further improving the value and liquidity of Ginnie Mae MSRs by continuing to advance options discussed in the Ginnie Mae 2020 white paper, including improvements to their MSR financing agreements and allowing loan-level servicing transfers (i.e., “split pools”).

>>Standardizing the servicing requirements at the government guarantors and clarifying the nature of the liability that participation in their programs entails. 

>>Making the mortgage market more attractive to banking institutions, including by addressing punitive capital requirements on mortgage servicing assets and reducing FHA False Claims Risk.

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