IMBs pressed consumer choice amid GSE privatization talks
Forty-six independent mortgage banks (IMBs) called on federal regulators to prioritize competition and consumer choice as Fannie Mae and Freddie Mac move closer to a potential exit from government conservatorship.
In a joint letter sent to Treasury Secretary Scott Bessent and Federal Housing Finance Agency Director William Pulte, the IMBs, led by the Community Home Lenders of America (CHLA), outlined policy recommendations they said were essential to protect smaller lenders and homebuyers.
The letter arrived on the eve of the 17th anniversary of the government’s takeover of Fannie and Freddie, and in the wake of reports that the Trump administration was considering a public offering of the government-sponsored enterprises (GSEs) before year-end.
“We write as independent mortgage banks - non-bank mortgage loan originators - to identify essential elements of a Fannie Mae and Freddie Mac exit from conservatorship,” the group said.
“IMBs - predominantly small businesses, with roots in the local community - play a critical role providing mortgage loans for first-time homebuyers, including veterans, minorities, and families in rural areas.”
The letter cited IMBs as originating 83% of all mortgage loans and 75% of all Fannie/Freddie loans, referencing the 2024 IMB Report.
Among the IMBs’ top priorities were maintaining guarantee fee (G Fee) parity and a competitive cash window. “G Fee parity precludes one of the most pernicious pre-2008 housing crisis practices - preferential pricing for large, reckless lenders like Countrywide and WaMu,” the letter said.
The group also warned against granting Wall Street banks new GSE charters, arguing that “competition should be at the mortgage origination level - and not at the level where a GSE guarantee is granted to a handful of mega-lenders.”
The IMBs urged regulators to keep Fannie and Freddie separate under a utility model, cautioning that a merger could create a monopoly and reduce market accountability.
“Fannie and Freddie should not be combined into a market monopoly. Further, the GSEs should operate under a Utility Model with authority to cap excessive G Fees or bar unduly risky loans,” the letter said.
The letter also called for the preservation of mission-based mortgage products, including loans for condominiums, manufactured homes, and rural properties, warning that “stockholder earnings pressures after a GSE exit from conservatorship could create incentives for Fannie and Freddie to abandon critical lower volume mortgage loan products.”
Finally, the IMBs advocated for the GSEs to purchase mortgage-backed securities to help lower mortgage rates, echoing recent calls from the administration to address affordability challenges.
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