MBA Statement on FSOC’s Report on Mortgage Servicing

WASHINGTON, D.C. (May 10, 2024) — MBA’s President and CEO Bob Broeksmit, CMB, released the following statement regarding the Financial Stability Oversight Council’s (FSOC) report released today on nonbank mortgage servicing:

“MBA agrees with the report’s analysis of the critically important role independent mortgage banks (IMBs) play in the mortgage market: lending to, and servicing loans for, a majority of first-time and low- and moderate-income homebuyers.

“The report identifies sensible opportunities for structural reform to the Ginnie Mae program while highlighting Ginnie Mae’s ongoing effort to expand liquidity options and relieve liquidity pressure on issuers. These efforts would make Ginnie Mae and government loan servicing more efficient, reduce liquidity pressure, and ultimately reduce costs for Federal Housing Administration (FHA), Veterans Affairs, and Rural Housing borrowers. 

“We share FSOC’s goals of a safe, stable, and sustainable financial services marketplace, but some of the report’s recommendations are unnecessary. Years of punitive regulatory capital treatment have already limited the willingness and ability of depository institutions to participate in the mortgage lending and servicing markets. While we support national standards for capital and liquidity requirements, layering duplicative supervision requirements or supervisory entities onto a heavily regulated market will add significant cost and complexity. Managing such changes, should Congress require them, could lead to reduced appetite for mortgage servicing assets. Reducing competition and credit availability while increasing borrowing costs is antithetical to regulators’ goals of a diverse and robust market for mortgage lending and servicing.

“The report fails to consider the adverse impacts the Basel III Endgame proposal would have on the mortgage market, which if implemented as proposed, would push banks further out of the business and make it more difficult for them to provide the vital financing that sustains IMBs. 

“MBA will review the report and its recommendations in detail in the coming days and will continue to engage with the Administration and FSOC agencies and staff on these and other issues around non-bank mortgage lending and servicing.”