On Aug. 8, 2014, NAR President Steve Brown provided comments to the U.S. Department of Treasury in response to a request for Public Input on Development of Responsible Private Label Securities (PLS) Market. In the letter, NAR highlighted principles for bringing private capital back to the mortgage market:
- NAR believes that the federal government must clearly, and explicitly, offer a guarantee of mortgage securities;
- Full privatization is not an effective option for a secondary market because private firms’ business strategies will focus on optimizing their revenues and profits’;
- Finalizing the QRM rule will provide the certainty of a regulatory framework for securitiziation;
- We are generally supportive of the Consumer Finance Protection Bureau’s (CFPB’s) Qualified Mortgage (QM) rule and believe this standard should be used to define the Qualified Residential Mortgage (QRM) in any future housing finance system;
- Private industry participants must address the lack of trust in the PLS space as it still remains and is hard to quantify as a cost that can be made up with arbitrary fee increases at the GSEs;
- A uniform securitization platform should be required for issuers of government guaranteed securities and be open to use by issuers of private label securities. Transparency and uniformity in the mortgage securities market will go a long way to minimizing conflict and confusion and promoting stability.
NAR is continuing to work closely with Congress and policymakers on housing finance reform and prioritize access to credit for qualifed borrowers.