Mortgage Bankers Association GSE Reform Paper Includes Dedicated Funding for HTF

The Mortgage Bankers Association (MBA) issued a paper on its recommended approach to reforming the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The recommendations include an affordable housing fee dedicated in part to support the national Housing Trust Fund (HTF).

GSE Reform: Creating a Sustainable, More Vibrant Secondary Mortgage Market states that the nation’s affordable housing needs cannot be achieved exclusively through the government-guaranteed secondary mortgage market as currently provided by the GSEs. The MBA recognizes that a supplement is necessary and recommends that GSE reform include an affordable housing fee dedicated to support affordable housing funds like national Housing Trust Fund (HTF) and the Capital Magnet Fund (CMF).

MBA says that core principles should guide the size and use of an affordable housing fee. The fee should:

  • Work in a manner like the current (4.2 basis points) fee assessed on new business that the GSEs pay to the HTF and CMF. The current fee is charged on each dollar of the outstanding principal balance of total new single-family and multifamily loans purchased by the GSEs each year.
  • Be established by the Federal Housing Finance Authority (FHFA) through public notice and comment rulemaking, subject to a range established by Congress.
  • Be set at a level that generates meaningful contributions to a range of important affordable housing efforts without unduly raising the cost of mortgage credit for consumers.
  • Be consistently applied for reasonable time periods to ensure continuity and maximize compliance.
  • Support mission-related activities undertaken by funds such as the HTF, CMF, and a new Market Access Fund (MAF). The MAF would support research, development, and innovations in consumer education, product design, new market segments (such as single-family rentals), underwriting and servicing, as well as credit support for certain mortgage loans or pools and the development of affordable housing for rent and for sale. A similar fund was proposed in the Johnson-Crapo GSE reform legislation in 2014 (see NLIHC media release about Johnson-Crapo,

In the larger context of GSE reform, the paper outlines the key principles that should guide the reform effort and provides a detailed picture of a new secondary-market end state. It also attempts to shed light on two critical areas that have tested past reform efforts: the appropriate transition to a post-GSE system and the role of the secondary market in advancing an affordable housing strategy.

The MBA paper is at: