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Against the backdrop of a new presidential administration and a new Congress, Mortgage Bankers Association President and CEO Bob Broeksmit laid out the trade group’s priorities during the opening session of the MBA’s IMB25 conference Monday. First on the list? A smooth exit from conservatorship for Fannie Mae and Freddie Mac.
“We can’t let the best housing finance system in the world be damaged by a hasty exit that doesn’t thoroughly think through all the consequences,” Broeksmit said during the session. “That does not make MBA anti-exit-from-conservatorship.”
Indeed, Broeksmit outlined how 16 years of conservatorship have created inefficiencies at the GSEs, blunted their competitiveness and made it hard to recruit and retain top talent. But he also cautioned against us-versus-them thinking.
“At MBA, we envision a new era at in our relationship with Fannie and Freddie. We welcome the strengthening of our partnership. Lenders of all sizes and servicing firms can and should be partners with the GSEs to sustain a housing finance system that is stable and liquid and enables homeownership and the creation of generational wealth,” Broeksmit said.
Here are the details of MBA’s priorities:
Releasing the GSEs from conservatorship
Broeksmit said the MBA identified four overarching principles it believes should frame the release of Fannie and Freddie:
- An explicit backstop. “Without it, global investors’ confidence buying, holding and selling GSE mortgage-backed securities could be jeopardized, which would greatly impact liquidity in the market and drive rates up even higher than they are today.”
- A level playing field. FHFA must ensure “that pricing and underwriting does not vary for a lender based on size, business model or charter.”
- The bright line between primary and secondary market functions. This must be “clearly defined and rigorously enforced by FHFA.”
- Regulatory enhancements at FHFA. FHFA should be granted “the necessary powers and responsibilities to regulate the GSE rate of return and market conduct, often viewed as utility style authorities.
“We are ready to work with the Trump administration and members of the 119th Congress, launching a new era of home finance — one in which the GSEs are no longer in conservatorship, but one in which the American housing finance system remains the envy of the world,” Broeksmit said.
Extending tax provisions
The MBA will work with Congress on the extension of tax provisions that are set to expire by the end of this year. These include:
- Preservation of the deferred tax treatment of mortgage servicing rights.
- Preserving the Section 199A pass-through deduction
- Preserving and possibly expanding the capital engagement exclusion for the sale of primary residences.
- Expanding and improving the Low Income Housing Tax Credit and supporting other housing supply-related tax credits.
- Supporting provisions like 1031 exchanges.
Broeksmit said that MBA is closely watching the various proposals to pay for tax cuts. Spending more than the government takes in means issuing a lot of Treasury obligations, which increases the supply of fixed income instruments — and that could drive up mortgage rates.
There’s also a concern that fiscal hawks in Congress will see a ready-made solution in the GSEs. “The specific thing that we have to be on guard for is not having GSE release be rushed because there’s some pot of money at the end of the rainbow that’ll help pay for tax cuts,” Broeksmit said.
Guarantee fees could be another tempting source of income for Congress, Broeksmit said. “Some of you remember many years ago, there was a one-month payroll tax holiday that was paid for with a 10 year, 10 basis point increase to Fannie and Freddie g-fees, and the minute a few years fall off of that 10 years, the Congress has shown its willingness to extend it.”
Trigger leads
The MBA will continue its advocacy for a trigger leads bill that will “build on the momentum we achieved in the last Congress and complete the push for enactment of legislation to curve the use of use of trigger leads while preserving their use in appropriately limited circumstances.,” Broeksmit said. Significant effort pushed the trigger lead through the Senate in late December but the legislation got stuck in the house as the term ended.
Credit scores
Broeksmit said “addressing the many unanswered questions and roadblocks that our members have regarding the transition of FICO 10 T and VantageScore 4.0 as well as a bi-merge option,” are on the top of the list of MBA priorities.
Specifically, Broeksmit said that in the current credit scoring process, “the government bestows the market position by requiring it for government backed loans, and then the entities that produce these services raise prices in a way that has no bearing that we can see on the cost of providing them. That’s an inappropriate use of a market benefit bestowed by the government, and it’s costing your businesses and your borrowers millions of dollars in extra expenses.”
Regulation and affordability
Broeksmit lauded President Trump’s promises to cut unnecessary regulation to decrease costs for lenders and consumers.
“The availability and affordability of housing was one of the top issues on the minds of voters in the 2024 election. President Trump campaigned on lowering costs for Americans and we appreciate housing supply and affordability were included in an executive order on this issue. We will support efforts to cut unnecessary regulatory red tape and pursue federal housing program enhancements that make renting and homeownership more attainable and sustainable.”
