Broeksmit: Mba Ready To Work On Gses’ Exit From Conservatorship

Removing the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from federal conservatorship — where they have been since the aftermath of the 2008 financial crisis — has been a longtime priority of Republican leaders in government. President-elect Donald Trump has spoken about it during his first term in the White House and in the run-up to his second election last month.

The Mortgage Bankers Association (MBA) stands ready to work with government leaders to help facilitate a “safe and sound exit plan from GSE conservatorship,” according to a new blog post authored by president and CEO Bob Broeksmit.

With the conservatorships in their 17th year, the prospect of dialing them back has become more likely after the results of this year’s general election. Republicans will control the executive and legislative branches of government until at least early 2027, and the judicial branch will have a conservative majority that could be further cemented if a Supreme Court vacancy occurs in the next four years.

“Under presidents Obama, Trump and Biden, amid shifting party control on Capitol Hill, consensus on an exit strategy has proved elusive, most recently in the final weeks of the first Trump administration,” Broeksmit wrote. “That might change in the next two years with the GOP trifecta in Washington.”

The MBA welcomes the chance to “work with policymakers to forge a path to finally end the conservatorship, which was never intended to be permanent,” Broeksmit added. But navigating the specifics will be a challenge. It will require “precision and an ample runway to ensure deep, liquid secondary markets for single- and multi-family mortgages through all economic cycles and in all geographic regions,” he wrote.

Over the past 15 years, MBA has advocated for administrative reforms that it wants to see “locked” prior to any exit. These reforms include “a level playing field for all sellers with respect to G-fees and variances, the uniform mortgage-backed security (UMBS), representation and warranty reforms and a transparent ‘new activity’ rule,” Broeksmit said.

Codifying these will be essential, he wrote, but the narrowly divided Congress and incoming White House leadership will need to find consensus on several other issues. These include the Preferred Stock Purchase Agreements (PSPAs) that were implemented during the Obama administration.

“For MBA, the most critical issue to address before releasing the GSEs is the establishment of an explicit federal backstop for mortgage-backed securities,” Broeksmit said.

But Congress has had a revolving door over the past two decades. This necessitates substantive conversations to ensure lawmakers have full understanding of the underlying issues, if they choose to act on GSE privatization in the next few years, he added.

“Since the GSEs entered conservatorship, hundreds of lawmakers have come and gone,” Broeksmit said. “Enacting legislation will require educating the many members of the House and Senate who were not in office during the financial crisis and those who have not participated in the prior debates on ‘GSE reform.’”