TMC's Letter to FHFA Regarding Front-End Risk Transfers

July 15, 2016
 
The Honorable Melvin L Watt, Director
Federal Housing Finance Agency
Constitution Center
400 7th St. SW
Washington, DC  20219
 
Re: Front-end Credit Risk Transfers
 
Dear Director Watt,
 
We commend FHFA for beginning the discussion of front-end credit risk transfers however based on the need for a collateralized recourse agreement for small lenders to participate the gate isn’t wide enough.
 
The Mortgage Collaborative (TMC) represents $110 Billion a year in aggregate loan production from small to mid size lenders and we believe they should be treated equitably with the larger institutions.
 
Currently small lenders operate in a disadvantaged market given capital requirements and repurchase agreements.
 
We support MBA’s position of deeper mortgage insurance that would cultivate small lender competitiveness. TMC also encourages shelters for small lenders with constraints on volume discounts.
 
The Mortgage Insurance Companies extensive capital raises since 2007 has put them in a strong position to facilitate the above and keep the playing field level for all that wish to participate in loan securitization.
 
An accessible, straightforward secondary market is what will move real housing reform forward. This can only be accomplished with the correct form of front-end credit risk transfers.
 
Sincerely,                                               
                                                                                                                              
John M. Robbins, CMB                      David G. Kittle, CMB
Chairman                                          Vice Chairman
                             
Jim Park                                            Gary Acosta
CEO                                                     Partner