MBA Seeks Fix for Reps & Warrants on GSE Purchase Loans

Fannie Mae and Freddie Mac have streamlined their refinancing requirements under the direction of the GSE regulator, but little has been done to ease restrictions on purchase mortgages, according to the Mortgage Bankers Association chief executive.

“Credit remains tight and builders are complaining about access to credit on the purchase side,” MBA president and CEO David Stevens said Monday morning.

The Home Affordable Refinancing Program developed by the Federal Housing Finance Agency has worked “great,” Stevens said at a Bipartisan Policy Center forum on housing finance reform. 

But HARP refinancings were slow to get out the box until FHFA “realized they had to deal with representation and warranties and streamline documentation,” Stevens said.

The MBA chief executive noted that FHFA hasn’t made that kind of effort on the purchase side. Rep & warrants “remain overly onerous—making lenders afraid to make a mistake.”

Meanwhile, Washington’s attention has turned to GSE reform legislation that will probably take years to pass. And FHFA’s initiative to create a new GSE securities platform will take years to build.

MBA wants industry groups to agree on several steps that can be implemented now without legislation to improve the functioning of the housing finance system.

One step would be to create a common GSE MBS structure. In trying to lay groundwork for housing finance reform, MBA believes Freddie must transition to the same MBS structure as Fannie. That would improve the pricing and liquidity for Freddie MBS.

“We aren’t dealing with the fundamental aspects of a transition,” Stevens said.