In a new report, the Independent Community Bankers of America (ICBA) detailed its recommendations for reforming Fannie Mae and Freddie Mac to support continued access to the secondary mortgage market for community bank lenders.
“Community banks depend on Fannie Mae and Freddie Mac for direct access to the secondary mortgage market, which promotes lending in local communities and offers an alternative to the largest and riskiest financial institutions,” ICBA President and CEO Camden Fine said. “ICBA and the nation’s community bankers urge Congress and the Trump administration to end the destructive sweep of the GSEs’ earnings directly to government coffers, put the GSEs on sound financial footing, support equitable access to the housing-finance system, and protect taxpayers from another housing crisis.”
ICBA is calling on policymakers to allow Fannie Mae and Freddie Mac to rebuild their capital buffers, citing that the two entities paid out nearly $80 billion more to the U.S. Treasury than they received during the financial crisis. ICBA also said reform should preserve equal access to lenders of all sizes.
ICBA recommends that the Federal Housing Finance Agency end the GSEs’ net-worth sweep, establishing capital-restoration plans, and delaying the launch of its Uniform Mortgage Backed Security until the GSEs are recapitalized and released from conservatorship.
Congress should create a catastrophic mortgage insurance fund for GSE securities and changed the GSEs to regulate and shareholder-owned financial utilities, ICBA said in their recommendation.