The Federal Housing Finance Agency should require the government-sponsored enterprises to purchase loans with "deeper levels of credit enhancement (via mortgage insurance, lender recourse or capital market investors) in exchange for bona fide reductions in guarantee fees and other loan level charges," the Mortgage Bankers Association said in a new white paper released Monday.

This would force the mortgage insurers to compete for business at the lender level instead of negotiating with just Fannie Mae and Freddie Mac. And lenders would be "de-risking" the mortgages before they are purchased by the GSEs, according to the MBA white paper.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.