Policy experts' GSE reform plan would benefit big banks, community lenders say

SOURCE: Mortgage News Feed

A trade group that represents small lenders says a proposal to turn Fannie Mae and Freddie Mac into a single government corporation would cede control of the mortgage markets to the big banks. The Community Lenders of America (CMLA) slammed a government-sponsored enterprise (GSE) reform plan released last month by a group of policy experts and released a competing plan. In March, five analysts led by former White House advisor Jim Parrott and Moody’s Analytics Chief Economist Mark Zandi rolled out their plan called “A More Promising Road to GSE Reform.” Under that vision, a new corporation would take over the GSE functions of purchasing and securitizing loans. The government would provide an explicit government guarantee on mortgage-backed securities, but the new entity would be required to transfer all of the noncatastrophic credit risk to private entities. Read Full Article Here >>

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