Community Home Lenders Association Renews Call
for Changes to GSE Sweep Agreement and FHFA Recapitalization Plan in Wake of Jump Start Adoption
Contact: Scott Olson
In the wake of Congress including the GSE Preferred Stock Jump Start provision in the Omnibus Spending bill, the Community Home Lenders Association (CHLA) today renewed its call for the GSE Sweep Agreement to be modified to allow the GSEs to build up reserves and avoid the need for a taxpayer advance. CHLA also called for the FHFA to develop and present to Congress a recapitalization plan for the GSEs, so that Congress can make the most informed decision on how to move forward.
Scott Olson, Executive Director of the CHLA, issued the following statement by the CHLA.
“While the Community Home Lenders Association is disappointed that Congress has adopted so-called Jump Start language that will hamstring progress on GSE reform, we renew our call for an amendment to the Profit Sweep Agreement, so that the GSEs can build up reserves from their own profits. We also call on the FHFA use its authority as conservator to develop a GSE recapitalization plan, to present to Congress.”
Both of these actions are still permitted under the language in the Jump Start provision in the Omnibus bill. CHLA believes the actions it is calling for will continue progress on GSE reform that has already taken place through risk sharing pilots and work on the Common Securitization Platform – and would help Congress as it wrestles with the complicated process of GSE reform.
“Amending the Sweep Agreement is a critically needed step to avoid a contrived bailout under the one-sided nature of that Agreement – and thus avoid reductions in consumer access to mortgage credit. It would also eliminate incentives in the Sweep Agreement for GSEs to contract credit, resulting from their existing – and dwindling small reserve levels.”