On the eve of a Senate Banking Committee GSE reform hearing on small lender access to secondary markets, the Community Home Lenders Association (CHLA) is weighing in with its recommendations on how to preserve such access for small and mid-size mortgage lenders.
“It is critical to maintain consumer choices through a diverse range of mortgage lenders in a reformed mortgage market,” said Scott Olson, Executive Director of CHLA. “CHLA is offering mortgage reform principles and legislative recommendations to achieve this key objective.”
The Community Home Lenders Association is the only nationwide association exclusively representing non-bank mortgage lenders. The CHLA has taken an active role in the debate on GSE reform, submitting statements for Congressional hearings, and presenting its principles and legislative recommendations to key Congressional members who are developing mortgage reform legislation. CHLA believes consumers are best served by maintaining community lenders that offer quality services at a personalized local level. CHLA’s key recommendations are as follows:
- Preserving a Cash Window. CHLA supports creation of a mutual cooperative to serve small lenders – but also advocates strengthening this to require the new regulator to take “such actions as are necessary” to ensure that it provides competitive access and pricing. CHLA also advocates making non-bank lenders eligible for any FHLB securitizations that take place.
- Preventing Market Dominance by “Too-Big-To-Fail” entities. CHLA wants to avoid a market dominated by the same “Too-Big-To-Fail” entities that played a key role in subprime MBS and the housing crisis. Specifically, CHLA is concerned about market concentration if securities firms can exclusively purchase from their lending affiliates. CHLA advocates a 10% nationwide market share cap on any securitizer and a provision that the regulator should pursue policies that allow continued securitization of loans by qualified smaller lenders.
- Fair and Equal Treatment of All Mortgage Lenders. CHLA advocates prohibiting private market players from using the government guarantee to use volume discounts which discriminate against smaller lenders – a practice that resulted in GSEs’ expanding purchases from large – but very risky – firms like Countrywide leading up to conservatorship. CHLA also wants protections that capital standards be accurately established – not used as a tool to discourage small and mid-sized lenders from participating in mortgage origination and servicing.
“The CHLA is pleased that Congress is making small lender access a GSE reform priority, as evidenced by Tuesday’s hearing,” said Scott Olson, Executive Director of the CHLA. “But we also need to get the details right – to protect consumers, to protect small and mid-size mortgage lenders, and ultimately to protect our nation’s housing markets and overall economy.”
The Community Home Lenders Association (CHLA) is a national non-profit association of small and mid-sized community-based mortgage lenders. The mission of the CHLA is to promote federal mortgage programs, rules, and regulations which treat community mortgage lenders fairly, and which reflect the critical importance that community mortgage lenders play in providing broad access to credit for borrowers, in increasing competition in mortgage markets, and in providing borrowers with quality mortgage services and access to loans at a local level.