On September 18, 2017, Anthony Sisto, CBAI’s First Vice Chairman and Chairman & CEO of STC Capital Bank in St. Charles, and David Schroeder, CBAI’s Vice President Federal Governmental Relations, participated in a housing finance roundtable discussion hosted by Illinois Congressman Randy Hultgren (R-14th). Reform of the housing Government Sponsored Entities (GSEs) will hopefully be revisited by Congress in the coming months. This roundtable, which was also attended by several other stakeholders, provided an opportunity to discuss a variety of priorities, objectives, and concerns so that reform efforts result in appropriate support for affordable home ownership and protect American taxpayers from unnecessary risks.
Housing finance reform has been a CBAI Federal Policy Priorities (FPP) since housing GSE were placed into conservatorship. CBAI stated in its 2017 FPP:
- “As it considers reforms to the housing GSEs, Congress should recognize that community banks and our economy need the continued existence of an impartial secondary market for residential mortgages that is financially strong and reliable. Fannie and Freddie may not survive in their current form; however, the financial crisis demonstrated the need for some level of government involvement in the secondary market to ensure the continued flow of credit and market liquidity during periods of severe economic stress.”
CBAI supports the Independent Community Bankers of America’s (ICBA) Principles for GSE Reform which include the following:
- The GSEs must be allowed to rebuild their capital buffers.
- Lenders should have competitive, equal, direct access on a single loan basis.
- The GSEs must be adequately capitalized, liquid, and reliable enough to effectively serve the entire mortgage industry in all markets, at all times, including challenging economic circumstances.
- Credit risk transfers must meet targeted economic returns.
- An explicit government guarantee on GSE MBS is needed.
- The TBA market for GSE MBS must be preserved.
- Strong oversight from a single regulator will promote sound operation.
- Originators must have the option to retain servicing, and servicing fees must be reasonable.
- Complexity of structure and operations should not force consolidation.
- GSE assets (automated underwriting technology, loan delivery portals, Common Securitization Platform, and multi-family housing businesses) must not be sold or transferred to the private market.
- The purpose and activities of the GSEs should be appropriately limited and must be focused on supporting residential and multifamily housing. They must not be allowed to compete with originators at the retail level, where they would enjoy an unfair advantage.
- GSE shareholder rights must be upheld.
CBAI appreciated the opportunity to provide input during Congressman Hultgren’s roundtable discussion on these important issues and looks forward to working with Congress and the agencies as GSE reform measures progress through legislation.
September 20, 2017