MBA Commends Confirmation of Mel Watt as FHFA Director

E.J. Burke, Chairman of the Mortgage Bankers Association (MBA), today issued the following statement on the confirmation of U.S. Representative Mel Watt to be Director of the Federal Housing Finance Agency (FHFA):

“MBA commends the confirmation of Mel Watt as the next Director of the Federal Housing Finance Agency. Because he brings more than two decades of work on the House Financial Services Committee, he will have a strong base of understanding on a wide variety of public policy issues related to housing finance. Additionally we would like to thank Acting Director Ed DeMarco for working hard to address the major issues facing the real estate finance industry.

“MBA looks forward to working with Director Watt on developing and implementing ideas to improve the function of the secondary mortgage market.  Fannie Mae and Freddie Mac have been in conservatorship for more than five years, and it’s well past time to move forward on reform.  As Director of FHFA, Congressman Watt will have a historic opportunity to shape the secondary mortgage market and the government’s role in housing.

“MBA believes a successful secondary mortgage market needs to produce a more stable and competitive system for all lenders. Transition to an improved system must retain and redeploy key aspects of the GSEs’ existing infrastructures, including certain operational functions, systems, people and business processes that have proven essential to the mortgage market’s smooth operation.

“Specifically included in this new system must be an explicit government guarantee for mortgage securities, backed by a well defined class of high quality, single-family and multifamily mortgages; protection for taxpayers through deep credit enhancement that puts private capital in a first-loss position, with no institution too big to fail; and fair and transparent guarantee fees to create an FDIC-like federal insurance fund to serve as a backstop in the event of catastrophic losses.”