CHLA Lauds Small Lender Protections in GSE Reform Bill
Cites Provisions to Preserve a Cash Window and Securitization Options
Contact: Scott Olson
The Community Home Lenders Association (CHLA) today lauded the provisions in the Senate GSE Reform bill reported out of committee today which create a mutual cooperative in order to preserve a cash window for small lenders – as well as new affiliation restrictions, which will help protect small and mid-sized lenders’ ability to continue to securitize loans.
“The Community Home Lenders Association lauds Chairman Johnson, Ranking Member Crapo, and other bill sponsors for creating a mutual cooperative for small lender cash window needs, addressing key issues like capitalization and infrastructure,” said Scott Olson, CHLA’s Executive Director. “We are also pleased with recent inclusion of requirements to evaluate whether the coop, using CHLA suggested language, is ‘fully meeting small lender cash window needs.’”
Preservation of an effective cash window for small and mid-sized lenders has been a top priority for the CHLA since introduction of the Corker-Warner bill last fall. CHLA had pushed for provisions that were then added to the bill, e.g., capitalization by the federal government, use of existing GSE infrastructure, and other provisions to facilitate the cooperative. More recently, CHLA has advocated for strengthened protections to ensure that the cash window fully meets small lender needs, plus other important criteria, which the managers’ amendment adopts.
CHLA‘s other top priority has been preserving the ability of small and mid-size lenders to do GSE securitizations, in order to preserve competition for consumers and avoid concentration. CHLA has been advocating since last year for changes to prevent the big banks from dominating mortgage origination markets through their provision of risk sharing by affiliate guarantors or securities firms. CHLA applauds the inclusion of provisions in the managers’ amendment to address this issue, by restricting vertical integration. However, CHLA continues to have ongoing concerns about the pernicious effects of volume discounts in discouraging competition, and about the possibility of increased concentration as mortgage reform takes effect.
“The Committee has provided a strong framework for moving forward on reform of our mortgage finance system,” said Scott Olson of CHLA. “As the process moves forward, we hope Congress continues to focus on protecting consumers by ensuring that small and mid-sized lenders continue to play a key role in serving borrowers and communities nationwide.”
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.