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DEC 6, 2013 4:11pm ET

Secure and Fair Enforcement Act Failing to Live Up to Name?

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Amending the SAFE Act is the Mortgage Bankers Association's chief priority for 2014.

While there are numerous unresolved issues on the table, MBA president David Stevens said at an association-sponsored conference in Miami that the list starts with the SAFE Act, which requires only independent mortgage bankers to meet certain education standards.

Stevens called the law "patently unfair," not just for independent mortgage bankers but also consumers.
Borrowers "should be able to know that whatever loan officer they choose has met minimum education requirements," Stevens said at the MBA's second annual Independent Mortgage Bankers conference.

"We've got to change that law," he said. "We need to modify the rule that so every loan officer must pass the same high professional standards of education and testing."

The MBA also says the guarantee fees charged by secondary market entities Fannie Mae and Freddie Mac should be the same for all lenders. As it is, independent bankers are paying more than others, according to Stevens.

G-fees should be uniform, based on loan quality and not the size of the lender or the volume of loans lenders deliver to the GSEs, the association believes. "Parity is vital to your business and your ownership of the servicing asset," Stevens told the crowd.

In addition, the association objects to the consistent increases in the g-fees. The Federal Housing Finance Agency has said higher fees are necessary to attract private capital. But Stevens said "there is no private capital out there" that's ready to jump into the market.

That the MBA is taking the lead on these two issues, among many others, should serve to show that the 2,200-member association is representing the interests of its core constituency, Stevens told the conference.

Nearly 55% of the MBA's regular residential membership are community-based lenders, mostly locally owned mortgage companies or community banks.

"We've worked hard to advance, modernize and refocus the MBA to ensure we represent the best interests of all our members while at the same time recognizing your particular needs," he said in the speech prepared for delivery at the conference. "We have rolled up our sleeves and fought for issues that are most important to you."

Another issue in which the MBA believes it is fighting to protect small lenders is the future of Fannie and Freddie.

To those who think that the GSEs should simply be released from conservatorship—after all, they are profitable once again—Stevens pointed out that they continue to charge steep loan-level price adjustment and adverse market fees over above g-fees that are three times when they were a decade ago.

While the MBA believes the GSEs remain a critical part of the housing finance system, it says now is the time to improve the system and, in Stevens' words, "create a healthier, more competitive and stable secondary market for independent mortgage bankers."

In his prepared remarks, the MBA president said: "Reforms are clearly needed. Winding down does not mean destroying the infrastructure that connects you to the secondary market. We need to fix what was is fundamentally broken and keep what works. That is what responsible advocates are calling ‘reform.’”

Lew Sichelman is an independent journalist who has been covering the housing and mortgage markets for more than 40 years.

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