$FNMA #FANNIEGATE BANKING LOBBY SPLITS MBA VS CHLA

The Mortgage Bankers Association (MBA) joined two other national housing groups this week in urging Congress to support measures contained in the Jumpstart GSE Reform Act. But the Community Home Lenders Association (CHLA) and Community Mortgage Lenders of America (CMLA) say they oppose a key provision in the legislation that would prohibit the sale of Treasury-owned preferred shares in Fannie and Freddie without congressional approval.

The bill, which was first introduced two years ago by Sen. Bob Corker, R-Tenn., would effectively block the Obama administration or a future president from recapitalizing and releasing the GSEs without substantial housing-finance reforms.

“We believe such a provision would be viewed as a support for perpetual conservatorship, which we believe is contrary to the best interests of consumers, lenders and the mortgage market,”  CMLA’s Executive Director Glen Corso told Scotsman Guide News.

MBA’s letter specifically urges Congress not to allow Fannie and Freddie to be recapitalized without reforms.

“Our organizations have a long-standing interest in congressional efforts to reform Fannie Mae and Freddie Mac,” said the letter, which was co-signed by the National Association of Realtors and National Association of Home Builders.

“While much work remains on this front, prohibiting Treasury from selling their shares of senior preferred stock in the GSEs will ensure that Congress has the final say in any comprehensive housing-finance reform plan. With taxpayers currently backstopping the U.S. housing-finance system, the GSEs should not be allowed to recapitalize without congressionally approved reforms in place.”

Corker’s bill dates back to 2013. MBA’s recent letter was prompted because Corker and a bipartisan group of senators recently reintroduced the measure as an amendment to the currently pending highway bill. Another key provision in the act would block the use of Fannie and Freddie’s guarantee fees, known as g-fees, for purposes unrelated to housing risk. The Senate version of the highway bill proposes to use a portion of the g-fees to fund highway projects.

The CHLA and CMLA, organizations that lobby on behalf of small to midsized banks and nonbank lenders, do support the provision of Corker’s legislation that would prohibit diversion of the g-fees. The trade groups, however, have urged Obama to use executive power that puts forth a plan to “recap-and-release” Fannie and Freddie before Obama leaves office. The NAACP and other civil-rights and affordable-housing advocates also have sent a separate letter calling for recap-and-release.

CHLA’s Executive Director Scott Olson said Corker’s bill “could hamstring a change to the sweep agreement, which is needed to prevent a looming taxpayer advance and to preserve the GSEs’ role in providing access to credit.”

MBA didn’t immediately return a request for comment.

The GSEs have been in government conservatorship since 2008, and all their profits are kept, or swept, by the Treasury.

Earlier this month, CHLA and CMLA co-signed a letter urging the Obama administration to reconsider its policy after Treasury and White House officials indicated that the administration would not consider recapitalizing the GSEs. That signaled that the status quo would remain in place until after Obama leaves office because a deadlocked Congress has been unable to pass even piecemeal reforms.