The Community Home Lenders Association has issued a set of principles that it hopes legislators will follow in reforming the housing finance system.
The association of small and midsize nonbank lenders wants to ensure that any reforms will continue to provide a government guarantee on MBS similar to the Ginnie Mae program. And CHLA wants to ensure equal access to the secondary market for all lenders.
“We need to do mortgage reform the right way or we could end up with a mortgage market dominated by a few large lenders,” said Robert Eustis, president and chief executive of Eustis Mortgage Corp. in New Orleans.
“That outcome would limit consumer choice in the mortgage market, eliminate the personalized service that community lenders provide, and ultimately be bad for housing markets and the broader economy,” the CEO said.
To protect against market concentration, CHLA says guarantee fees should be uniform and pricing should not be based on loan origination volume.
“No entity with a government guarantee should do more than 10% of its loans with any originator,” according to the new association. Scott Olson is the executive director of the CHLA.
Key members of the House and Senate banking committees are working on legislation to address the future of Fannie Mae and Freddie Mac and on the housing finance system. Some observers expect these legislators will release their
“Almost everyone in Washington says they are concerned about access for smaller lenders,” said William McCue, president of McCue Mortgage Co., New Britain, Conn. “CHLA agrees, but we also go beyond general principles to a number of specific recommendations to help make this goal a reality.”
