Community banks and other small mortgage lenders will have access to a new securitization platform that Fannie Mae and Freddie Mac are going to build over the next five years, according to the GSE regulator.
Federal Housing Finance Agency acting director Edward DeMarco told members of the Senate Banking Committee told that standardized mortgage data and electronic reporting standards will be the key to equal access.
“When you develop an industry standard it is far easier for a community bank to acquire that technology from a vendor” and use it in their institution, DeMarco testified Thursday.
Developing a single set of standards will “lower costs and improve the ability of small institutions” to access the secondary market, he added.
The single platform is supposed to function as a “market utility” for private and government-guaranteed MBS. It will replace the existing “outmoded” securitizations platforms that Fannie and Freddie currently use, according to the GSE regulator. Members of the Senate Banking Committee seem to support his single platform initiative.
In a letter to the committee, the National Association of Federal Credit Unions urged senators to put safeguards in place to prevent discrimination against institutions based on size or type.
“To ensure this type of discrimination does not take place, NAFCU believes there needs to be a heavy focus on fair pricing that reflects loan quality as opposed to standards almost exclusively based on loan volume,” NAFCU executive vice president Dan Berger says in the letter.
“Loan quality and underwriting standards are the best way to ensure a healthy and efficient secondary market and a strong housing economy,” he said in the April 17 letter.
