Mostrnproposals for the future of the federally backed secondary mortgagernmarket do not envision the GSEs’ successors as having a balance sheetrnto fund a cash window. The Ginnie II and the Fannie Majors programsrnwhich allow single loan execution are more complex than using therncash window and thus few small lenders utilize them. There is a needrnfor the cash window to remain in place until an operable single loanrnexecution process is up and running. </p

Next,rnthe FHFA platform initiative needs to include plans for thernacceptance of small lot deliveries into multi-lender pools. Forrnexample, although multi-lender securities might not price well in therncapital markets, any discount could be reduced by pooling practicesrnthat increase their size. In addition it is important that somernsmaller lenders be able to securitize loans on a servicing-releasedrnbasis. The GSEs currently have programs in place that facilitaternbifurcation of reps and warrants for sellers and originators so thatrnoriginators can deliver loans servicer-released but participation isrntightly restricted. Such programs are essential going forward andrnshould be made more broadly. MBA says it believes these programs dornnot need direct facilitation for any other player and that sellersrnshould be able to negotiate reps and warrants directly with anyrnapproved servicer.</p

QUICKrnFUNDING</p

MBArnsays it is important for small originators to have an option forrnreceiving quicker funding. Today the GSE cash windows provide dailyrnfunding and in any new system there should be consideration given tornsetting more frequent settlement dates. Broker dealerss already providerna bid for off settlement date trades using interpolated pricing. Thernexpectation is that this market could grow if more sellers utilizernit.</p

“MBA’srnconcept papers all contain core components of any future staternincluding transparency, a steady flow of mortgage capital and anrnexplicit federal guarantee,” Bill Cosgrove, CMB, MBA’s VicernChairman said. “This paper clearly and concisely lays out thernkey issues that community banks and independent mortgage banks likernmine need to see addressed as we move towards the secondary mortgagernmarket of the future.”</p

ThernFirst concept paper released by MBA were KeyrnSteps on the Road to GSE Reform,</iwhich suggests that the Federal Housing Finance Agency (FHFA) directrnthe GSEs to modify the Freddie Mac PC to mirror the exact structure</bof the Fannie Mae MBS so that these securities would be consideredrnfungible for TBA delivery.   The second report was Up-FrontrnRisk Sharing:  Ensuring Private Capital Delivers for Consumers</i in which MBA offers a solution to what is says is the governmentrnis crowding out private capital and blocking real competition; FHFArnshould o require the GSEs to offer risk sharing options to lenders atrnthe "point of sale" rather than at the back end byrnenhancing loans that are already on the GSEs' balance sheets.