TMPG Consultative Summary Note ‘Theoretical Implications for Agency MBS Market Liquidity and Functioning of any Potential GSE Ownership Structure Changes’

Summary

SIFMA ¹ and SIFMA AMG ² provided comments to the Federal Reserve Bank of New York on the TMPG's Summary Note.

Excerpt

Since Fannie Mae and Freddie Mac (the "GSEs") entered conservatorship in 2008, SIFMA members have been keenly focused on how proposed changes to the U.S. housing finance system could impact markets for mortgage-backed securities, and consequently, the provision of liquidity and capital throughout the entire housing finance system from end investors to the ultimate benefi ciaries, American consumers. SIFMA is encouraged that discussions of how to resolve the long-running conservatorships of the housing GSEs have, to some extent, resumed.

In this letter, we discuss SIFMA's conceptual framework regarding the important role the GSEs and the To-Be-Announced ("TBA") mortgage-backed securities ("MBS") market play in the U.S. mortgage finance system and then turn to a review of the TMPG's Summary Note.

Our key points include:

1. MBS issued by the GSEs attract trillions of dollars of capital from across the globe to the US housing fi nance system through the TBA market, which ensures access to thirty-year, fixed-rate mortgages nationwide and throughout economic cycles, at lower rates than would otherwise be available.
2. Without the TBA market, mortgages would be more expensive, and their availability would become fractured regionally.
3. Any legislation or government action should articulate a clearly defi ned government role in the mortgage market that supports the "rates market" characteristic of the TBA market, and significant amounts of private capital should stand in front of the taxpayer.
4. SIFMA is generally supportive of the comments and conclusions set forth in the TMPG's Summary Note.