In his blog, posted on Thursday, Broeksmit warned that a merger of Fannie-Feddie would harm competition and increase the risks in the American home financing system, and noted that A similar idea was put forward by the National Economic Council In September 2016 and “received a careful assessment throughout the industry” before he was finally rejected.
“The competition between Fannie Mae and Freddie Mac is central to their success in offering liquidity and stability to the mortgage market,” wrote Broeksmit. “Creating a monopoly registered by the government would reduce innovation, purchase the service to market participants and increase the systemic risk by concentrating the business financing activities within a single entity.”
Broeksmit said that the competition between Fannie and Freddie that exists today yield a number of benefits for lenders and borrowers, including technological development, risk sharing in multi -family financing, specialized market expertise and product innovation that extends access to credit.
“Curator itself has already limited the capacity of the GSEs to compete and innovate,” he wrote, adding that the conservatory was never permanently intended. “This moment offers a unique opportunity to set a way in the direction of terminating the conservatory, locking critical guarantees and to build on the strengths of our current system in particular the wealth creation engine that is homeowner who is facilitated by the 30-year mortgage with fixed interest rates.”
Broeksmit admitted that although coordination between the GSEs is useful in some areas-such as standardized service, documentation, assessment standards and the uniform mortgage-supported safety (UMBs) consolidation would undermine incentives to compete.
The future of the GSEs will be the subject of a session at Housingwire’s Mortgage banking TOP On October 7 in Dallas. Pete Mills, senior vice -president of residential policy and strategic industry, and Rob Zimmer, head of external matters at the Community Home Lenders of America, will talk about the latest developments in DC and how lenders can prepare for any changes.
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